Monte Carlo Simulation in Valuation of Investment Projects

Marić, Branislav; Grozdic, Vanja

doi:10.2507/27th.daaam.proceedings.099

Cited by 3 publications

(1 citation statement)

References 16 publications

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“…As a result, venture capitalists' valuation of start-ups remains a guess and an alchemy (Miloud, T. et al, 2012). Maric, B. et al, (2016) have discussed several categorized methods and techniques that can be divided into five basic types: net present value methods, ratio methods, rate of return methods, payback methods, and accounting methods. Discounted cash flow (DCF) is the central feature of any investment analysis, since it takes into consideration the time value of money that is regarded as theoretically correct.…”

Section: Literature Reviewmentioning

confidence: 99%

Early-Stage Entrepreneurial Investment decision making: Challenges and Dynamics

Zarrouk¹,

Alnuaimi²

2022

Proceedings of the 6th International Conference on Applied Research in Management

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This study investigates the decision-making challenges that funders in the United Arab Emirates (UAE) face in selecting the best start-ups to receive high returns and ensure the sustainability of the business ecosystem. Further, it examines the funders' risks while making early-stage investments in innovative businesses. Applying a qualitative methodology, indepth interviews were conducted with 12 funders and analyzed using Nvivo software for deeper insights. The analysis permits understanding the dynamics of the key factors that funders consider to make better decisions on the perfect business to invest in with a higher probability of success. The key elements are based on their intuition, entrepreneurs' commitment, and the business trends the government encouraged. Specifically, government policies and programs supporting particular industries act as signals that affect the decisions made by investors. Further, the study highlights the challenges faced while investing in earlystage innovative enterprises. These include startup sourcing, the dedication of the founding and management teams, market risk-such as competition vs. imitation-, governmental regulation and the discrepancy between anticipated policy outcomes and actual implementation, funding needed to keep the business running, and financing constraints. Specific issues were explored, including the UAE business environment and its orientation in terms of growth and innovation. This research contributes to building up an ecosystem that supports start-up financing, providing lessons and implications to strengthen investors' decision-making processes, and developing a framework for financing policies, schemes, and programs for those seeking to encourage start-ups and foster entrepreneurship and economic growth in the UAE.

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Section: Literature Reviewmentioning

confidence: 99%

Early-Stage Entrepreneurial Investment decision making: Challenges and Dynamics

Zarrouk¹,

Alnuaimi²

2022

Proceedings of the 6th International Conference on Applied Research in Management

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Impact of Appropriate Gas Transmission Tariff on Private Investment in Gas Backbone Pipelines in Nigeria

2018

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The objective of this paper is to develop a model based on the Rate of Return framework to determine appropriate natural gas pipeline tariff for a given pipeline specification. The Levelized tariff will be based on the pipeline's cost of providing service to enable the pipeline investors to recover their Costs and earn a return on their investment. Ceteris paribus, with the transparent determination of acceptable gas pipeline tariff that guarantees profitability, investors will be incentivized to invest in building and operating gas backbone pipelines to serve the huge local gas market in Nigeria. Arbitrary rate of return, inefficient pipeline tariff and absence of regulation regime are reasons why investment in the gas pipelines has been unattractive to local and foreign investors.

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Comparative Analysis of Commercial Natural Gas Pipeline Economics under the Extant and Calculated Tariff Systems

Adejumo¹,

Iledare

Echendu³

2019

Day 3 Wed, August 07, 2019

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This paper presents a comparative analysis of economics of a commercial gas pipeline using the extant fixed tariff and a calculated tariff based on the Rate of Return Regulation framework. While the extant tariff is fixed at 0.8$/Mscf irrespective of throughput and location, the calculated tariff adjusts tariff levels to cost profiles and aligns it with the operators cost of capital. The arbitrarily fixed gas pipeline tariff has resulted in poor response by international investors to an otherwise lucrative sector of the gas industry while increasing the burden of a pipeline development on government in the face of limited resources. Using the proposed 48" x 127-Kilometer Obiafu-Obrikom-Oben Pipeline (OB3) as a case study, the discounted cashflow and stochastic analysis methodology are adopted to estimate economic indicators. Results show that the payback period is very attractive at less than 6.5 years for the calculated tariff while the payback period is in excess of 7.7 years for the extant tariff. NPV of the calculated tariff indicate a less likely than not chance of project failure while analysis with the extant tariff indicates a 23 percent likelihood of project failure. The paper provides additive information needed for would-be investors and the Nigerian government towards ensuring a workable framework to engender the envisaged infrastructure for gas pipeline.

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Monte Carlo Simulation in Valuation of Investment Projects

Cited by 3 publications

References 16 publications

Early-Stage Entrepreneurial Investment decision making: Challenges and Dynamics

Early-Stage Entrepreneurial Investment decision making: Challenges and Dynamics

Impact of Appropriate Gas Transmission Tariff on Private Investment in Gas Backbone Pipelines in Nigeria

Comparative Analysis of Commercial Natural Gas Pipeline Economics under the Extant and Calculated Tariff Systems

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