Discounted Cash Flow techniques are the generally accepted methods for valuing firms. Such methods do not provide explicit acknowledgment of the value determinants and overlook their interrelations. This paper proposes a different method of firm valuation based on fuzzy logic and expert systems....

In this paper we present a real-life application of a fuzzy expert system aimed at rating and ranking firms. Unlike standard DCF models, it integrates financial, strategic and business determinants and processes both quantitative and qualitative variables. Twenty-one value drivers are defined,...

This book presents a new approach to the valuation of capital asset investments and investment decision-making. Starting from simple premises and working logically through three basic elements (capital, income, and cash flow), it guides readers on an interdisciplinary journey through the...

This paper shows that the notion of rate of return is best understood through the lens of the average-internal-rate-of-return (AIRR) model, first introduced in Magni (2010a). It is an NPV-consistent approach based on a coherent definition of rate of return and on the notion of Chisini mean, it...

This paper illustrates an innovative approach to financial modeling of engineering decisionmaking and industrial projects. The approach is a minimal one, grounded as it is on three notions, two laws, and one matrix that combines them, called Split-Screen Matrix (SSM). This split-screen approach...

This paper employs the newly conceived accounting-and-finance engineering system(AFES) described in a previous paper (Magni 2023, “The Split-Screen Approach for Project Appraisal (Part I: The Theory)”), addressed to the analysis of capital asset investments. In this second part, we show how...

In this work, we solve a real-world facility location problem by means of a mixed integer linear programming model. The problem is faced by an Italian multi-utility company operating in the sector of waste management. The company works in several Italian regions to collect and treat the urban...

We present a model of performance measurement and attribution for delegated investments that summarizes the manager effect and the client effect on value creation. In particular, we introduce an innovative two-dimensional approach that, on one hand, detects the (manager and client) decision...

We propose a genuinely internal approach to project valuation and decision based on the average Return On Investment (ROI), obtained as the ratio of total operating profit (NOPAT) to total invested capital or, equivalently, as the ratio of net cash flow to total invested capital. The approach...

The average internal rate of return (AIRR), introduced by Magni (2010), fixes many deficiencies associated with the traditional internal rate of return (IRR), including apparent inconsistency with net present value (NPV). The AIRR approach breaks down project NPV into scale (the capital...