Capital budgeting under uncertainty: An empirical study

Strategic Capital Budgeting : Asset Replacement under Uncertainty

We consider a ...rm’s decision to replace an existing production technology with a new, more cost-e¢cient one. Kulatilaka and Perotti [1998, Management Science ] ...nd that, in a two-period model, increased product market uncertainty could encourage the ...rm to invest strategically in the new technology. This paper extends their framework to a continuous-time model which adds ‡exibility in tim...

Strategic Capital Budgeting: Asset Replacement under Market Uncertainty∗

In this paper the impact of product market uncertainty on the optimal replacement timing of a production facility is studied. The existing production facility can be replaced by a technologically more advanced and thus more cost-effective one. We take into account strategic interactions among the firms competing in the product market by analyzing the problem in a duopolistic setting. We calcula...

Working paper AN EMPIRICAL STUDY OF CAPITAL BUDGETING PRACTICES FOR STRATEGIC INVESTMENTS IN C.I.M. TECHNOLOGIES

In recent years, an increasing number of companies have been struggling to justify strategic technology investments using traditional capital budgeting systems. The existing accountingbased decision models (such as discounted cash-flow) are said to be no longer adequate to help evaluate investments in technological innovation, mainly because of the strategic, intangible nature of the benefits i...

A multistage stochastic programming approach for capital budgeting problems under uncertainty

This paper addresses the capital budgeting problem under uncertainty. In particular, we propose a multistage stochastic programming model aimed at selecting and managing a project portfolio. The dynamic uncertain evolution of each project value is modelled by a scenario tree over the planning horizon. The model allows the decision maker to revise decisions by decommitting from a given project i...

Rational Capital Budgeting in an Irrational World