One of the debates in the capital budgeting model selection is between the free cash flow and DCF methods. In this paper an attempt is made to compare SVA against NPV model based on Monte Carlo simulations. Accordingly, NPV is found less sensitive to value driver variations and has got higher...

The survey findings indicate the existence of gap between theory and practice of capital budgeting. Standard appraisal methods have shown a wider project value discrepancy, which is beyond and above the contingency limit. In addition, the research has found the growing trend in the use of value...

This paper applies real options theory to establish an overseas oil investment evaluation model that is based on Monte Carlo simulation and is solved by the Least Squares Monte-Carlo method. To better reflect the reality of overseas oil investment, our model has incorporated not only the...

This paper applies real options theory to establish an overseas oil investment evaluation model that is based on Monte Carlo simulation and is solved by the Least Squares Monte-Carlo method. To better reflect the reality of overseas oil investment, our model has incorporated not only the...

One of the debates in the capital budgeting model selection is between the free cash flow and DCF methods. In this paper an attempt is made to compare SVA against NPV model based on Monte Carlo simulations. Accordingly, NPV is found less sensitive to value driver variations and has got higher...

The survey findings indicate the existence of gap between theory and practice of capital budgeting. Standard appraisal methods have shown a wider project value discrepancy, which is beyond and above the contingency limit. In addition, the research has found the growing trend in the use of value...

All conceivable solutions to the internal rate of return equation are shown to have meaning as well as use. Internal rates of return are the units in which value is measured and the quantities of such units. This result implies a single internal rate of return cannot be an investment criterion....

Methodologically, the recommended investment project (IP) selection system is distinguished from one in force by: new conception allowing for time factor; evaluating IP efficiency by eventual reproduction results, not by intermediate investment activity results (included is a generalized...

Conventional financial advice is that net present value (NPV) is a superior investment criterion to internal rate of return (IRR) because IRR has pitfalls. Despite the pitfalls, evidence shows most practitioners continue to employ IRR as an investment criterion. Such behavior is puzzling. This...

Method discounting cash flow (DCF) is analyzed in the article. Article is demonstrating complete economic insolvency DCF. The fallacy of discounting method causes serious distortion of the results. It's wide usage entails negative consequences not only for the concrete investor, but also for the...