On Future Worth and Its Relationship to Present Worth as an Investment Criterion

Fleischer, Gerald A.; Leung, Lawrence C.

doi:10.1080/00137919008903025

Cited by 2 publications

(2 citation statements)

References 7 publications

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“…Max-NPV project scheduling problems can be categorized into two types: resourceunconstrained project scheduling problems and resource-constrained project scheduling problems [19]. The resource-unconstrained project scheduling problem means that the project has no restrictions on the use of resources.…”

Section: Max-npvmentioning

confidence: 99%

Studies on the Modifications and Applications of the Net Present Value and Internal Rate of Return

Tan¹,

Chen²,

Wang³

et al. 2022

Advances in Social Science, Education and Humanities Research

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In terms of investment decision making, it is vital for the decision makers, to be able to select the investment project that is the most profitable. Therefore, various models are established including the net present value (NPV) and the internal rate of return (IRR) for the investors to compare different investment projects. In this paper, studies by scholars focusing on the advantages and disadvantages, and the modifications as well as applications of the NPV and IRR models are summarized and presented, along with further prediction of future market situations. Studies have also suggested that the prediction of cost of capital has to be carefully taken into consideration in NPV, and the pitfalls of IRR when encountering non-conventional cash flows which multiple numbers of IRR may be attained. In addition, further studies have shown that the feasibility of NPV and IRR are limited, due to the non-conventional cash flow, thus several modified versions of NPV and IRR were constructed including Max-NPV, Decouple NPV, Modified IRR, and Average IRR. Moreover, this paper analyses the improvements among the amendments upon the two models, by eliminating the problems of inconsistencies of NPV and IRR; case studies are also discussed to clarify the practical uses of the modified versions. Despite the coherent results obtained from the calculations, analysis of individual investment projects should still be done, in order to work out the optimal decision.

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Section: Max-npvmentioning

confidence: 99%

Studies on the Modifications and Applications of the Net Present Value and Internal Rate of Return

Tan¹,

Chen²,

Wang³

et al. 2022

Advances in Social Science, Education and Humanities Research

View full text Add to dashboard Cite

show abstract

“…The Net Present Value (NPV) is how much money we can make over the life of the project given the time value of money (inflation depreciation). In more general terms, what is the maximum annual interest rate we can afford if we take out a loan to invest in the project [6,7].…”

Section: Introduction Of the Traditional Npvmentioning

confidence: 99%

A Systematic Literature Review on the Traditional NPV Model and Its Improved Versions

Li¹,

Li²,

Xu³

et al. 2022

Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022)

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Based on the analyses of the usage scenarios and limitations of the traditional NPV model, this paper aims to introduce and compare three kinds of the most practical and representative versions of the improved NPV models. In this study, the traditional NPV model is first introduced; followed by analyses of its main defects, such as low flexibility, inability to quantify the value of options, and changes in discount rates that may lead to errors in results. Therefore, three improved NPV models are introduced including Max-NPV, Fuzzy NPV and DNPV. The development background, reasoning logic and application scenarios of each of the three modified models were demonstrated in detail. In the end, some feasible suggestions are given including how to select appropriate modified NPV in reality as well as the matters needed to pay attention to application. This paper could provide useful reference for the NPV related study in the future.

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On Future Worth and Its Relationship to Present Worth as an Investment Criterion

Cited by 2 publications

References 7 publications

Studies on the Modifications and Applications of the Net Present Value and Internal Rate of Return

Studies on the Modifications and Applications of the Net Present Value and Internal Rate of Return

A Systematic Literature Review on the Traditional NPV Model and Its Improved Versions

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