Evaluating the Investment in the Malaysian Construction Sector in the Long-run Using the Modified Internal Rate of Return: A Markov Chain Approach

Abstract

In capital budgeting practices, investment project evaluations based on the net present value (NPV) and the internal rate of return (IRR) represent the traditional evaluation techniques. Compared with the traditional methods, the modified internal rate of return (MIRR) gives the opportunity to evaluate an investment in certain projet, while taking the changes in cash flows over time and issuing shares such as dividing shares, bonuses, and dividend for each end of the investment year into account. Therefore, this study aims to evaluate an investment in the Malaysian construction sector utilizing financial data for 39 public listed companies operating in the Malaysian construction sector over the period from Jan 1, 2007, to December 30, 2018, based on the MIRR method. Stochastic was studied in this study to estimate the estimated probability by applying the Markov chain model to the MIRR method where the transition matrix has two possible movements of either Good (G) or Bad (B). it is found that the long-run probability of getting a good investment is higher than the probability of getting a bad investment in the long-run, where were the probabilities of good and bad are 0.5119, 0.4881, respectively. Hence, investment in the Malaysian construction sector is recommended.

The Financial Behavior of Investment Decision Making Between Real and Financial Assets Sectors

“…Investments are classified into two categories: investment in financial assets and investment in real assets. The capital market has a critical role in investment because transactions occur between owners of capital and companies that issue investment products (Sarsour & Sabri, 2020). Investment products, such as stocks, can provide substantial returns but are always directly proportional to considerable risks.…”

The Role of B Companies in Tourism towards Recovery from the Crisis COVID-19 Inculcating Social Values and Responsible Entrepreneurship in Latin America

“…Other findings are shown in the motivations that led the explored companies to initiate the certification process to be recognized as a B company, which are mainly due to the fact that they identify, in their business model, a social purpose that they can fulfill, regardless of what B companies declare and promote [57,105]. Conversely, these companies, without having prior knowledge of what social purpose companies are, were interested in being certified as B companies, given their philosophy and principles [106][107][108]. Therefore, they carry out an internal examination of their processes and business models, identifying in them a social purpose that they contribute to society and that they seek to be recognized through B certification.…”

The Effect of Labor, Private Investment and Government Investment on Productivity in the Industrial Sector

“…Investment is a production factor that is indispensable in production activities, primarily to support increasing production capacity. This is explained by Joe et al (2009) which states that investment is the mobilization of resources to create or increase production capacity/income in the future, (Sarsour & Sabri, 2020) also explain that investment is a form of sacrificing wealth in the present to get profits in the future, with a certain level of risk. All of the statements above prove that with a great possibility, increasing the amount of investment can increase the amount of production as well, because investment acts as capital, or various costs incurred to buy equipment, raw materials, pay labor wages, and so on to increase production results, by Thus, this also confirms the production theory.…”