Risk Sensitive Value Measure Method
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Book Overview What is the most effective method for project evaluation? While the standard Net Present Value (NPV) method is widely used for its simpli...
What is the most effective method for project evaluation? While the standard Net Present Value (NPV) method is widely used for its simplicity, it has notable limitations: it insufficiently accounts for the random complexity of cash flows and fails to capture the flexibility inherent in project execution.
This book introduces an innovative evaluation method designed to address these shortcomings. It begins by analyzing the evaluation of random variables, representing the Random Present Values (RPVs) of cash flows, and identifies the optimal evaluation functional for RPVs. Through this analysis, the concave monetary value measure - or concave monetary utility function - emerges as the most suitable tool.
The study is then extended to dynamic value measures, leading to the conclusion that the risk-sensitive value measure is the most robust approach for project evaluation. Practical applications of this method are thoroughly explored, offering valuable insights for tackling real-world project evaluation challenges.
Book Details Format: Hardcover | Pages: 200 | Language: English | Publisher: WORLD SCIENTIFIC PUB CO INC | ISBN: 9819808553
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