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Fuzzy Real Investment Valuation Model for Giga-Investments, and a Note on Giga-Investment Lifecycle and Valuation

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  • Collan, Mikael

Abstract

Very large industrial real investments are different from financial investments and from small real investments, even so, their profitability is commonly valued with the same methods. A definition of a group of very large industrial real investments is made, by requiring three common characteristics. The decision support needs arising from these characteristics are discussed and a summary of existing methods to value and to provide decision support for large industrial investments is presented. A model built specifically to support investment decisions of very large industrial real investments and a numerical application of the model are presented. The model is discussed and commented. A note is made on an observation regarding the giga-investment lifecycle and its effect on giga-investment valuation.

Suggested Citation

  • Collan, Mikael, 2004. "Fuzzy Real Investment Valuation Model for Giga-Investments, and a Note on Giga-Investment Lifecycle and Valuation," MPRA Paper 4329, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:4329
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    File URL: https://mpra.ub.uni-muenchen.de/4329/1/MPRA_paper_4329.pdf
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    References listed on IDEAS

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    1. Majd, Saman & Pindyck, Robert S., 1987. "Time to build, option value, and investment decisions," Journal of Financial Economics, Elsevier, vol. 18(1), pages 7-27, March.
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    3. Zmeskal, Zdenek, 2001. "Application of the fuzzy-stochastic methodology to appraising the firm value as a European call option," European Journal of Operational Research, Elsevier, vol. 135(2), pages 303-310, December.
    4. Pindyck, Robert S, 1991. "Irreversibility, Uncertainty, and Investment," Journal of Economic Literature, American Economic Association, vol. 29(3), pages 1110-1148, September.
    5. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    6. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    7. Verbeeten, F., 2001. "The Impact of Uncertainty on Capital Budgeting Pratices. An Empirical Analysis of the Interrelationships between Uncertainty, Other Contingency Factors, Capital Budgeting Practices and Performance," Other publications TiSEM 9e7b76a4-0578-4753-ad05-1, Tilburg University, School of Economics and Management.
    8. Collan, Mikael & Liu, Shuhua, 2002. "Fuzzy Logic and Intelligent Agents: Towards the Next Step of Capital Budgeting Decision Support," Working Papers 398, IAMSR, Åbo Akademi.
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    Cited by:

    1. Collan, Mikael, 2004. "Giga-Investments: Modelling the Valuation of Very Large Industrial Real Investments," MPRA Paper 4328, University Library of Munich, Germany.

    More about this item

    Keywords

    Large industrial investments; Profitability analysis; Fuzzy corporate finance; Capital Budgeting;

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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