We use demand shifts induced by demographics to provide a novel evaluation of capital budgeting and market timing. Capital budgeting implies that industries anticipating positive demand shifts in the near future should issue more equity to finance capacity. To the extent that demographic shifts in the distant future are not incorporated into equity prices, market timing implies that industries ...

Most firms do not make explicit use of real option techniques in evaluating investments. Nevertheless, real option considerations can be a significant component of value, and firms which approximately take them into account should outperform firms which do not. This paper asks whether the use of seemingly arbitrary investment criteria, such as hurdle rates and profitability indexes, can proxy f...

Traditional capital budgeting models cannot appropriately capture the value of IT-systems. Real Option Pricing Theory provides a useful economic perspective on the valuation of IT-systems, although no comprehensive review of the state of the art of real option pricing models for IT-investments has been published to date. This paper provides an overview of the applicability of real option theory...

This paper presents a novel method to evaluate the economic feasibility of Fiber-to-the-Home networks resorting to state-of-the-art techniques. The method presented in this paper is a powerful combination of game theory, advanced capital budgeting algorithms with real options and Monte Carlo simulations with complex statistical distributions to evaluate project risk. Index Terms — FTTH, Game th...

There has been much debate about the current banking crisis, but less attention has been paid to the capital budgeting practices at banks and the adverse manner in which mispriced government guarantees have played a role. Viral Acharya, Professor of Finance at London Business School and Stern School of Business, New York, and Julian Franks, Oxera Director and Professor of Finance at London Busi...

In this paper, the researchers have proposed a multi-dimensional knapsack model for project capital budgeting problem in uncertain situation which has been modeled through fuzzy sets. The optimistic and pessimistic situations were considered and associated deterministic models were yielded. Numerical example has been supplied toillustrate the performance of proposed model. The results were prom...

This study examines how budgeting and funding affect service delivery in medical education in Nigeria using College of Medicine of the University of Lagos (CMUL) as the case study. Predicated on the human capital theory and the Resilience and Youth Development Module (RYDM) model, it employed the output-oriented Data Envelopment Analysis (DEA) as the main technique of analysis for measuring eff...

A variety of combinatorial problems (e.g., in capital budgeting, scheduling, allocation) can be expressed as a linear integer programming problem. However, the standard devices for doing this often produce an inordinate number of variables and constraints, putting the problem beyond the practical reach of available integer programming methods. This paper presents new formulation techniques for ...

Public debt and budget deficits arouse great concern. Households, financiers, and social scientists expend great energy on this topic. While there are many dimensions to the problem, I would tend to organize my thoughts around three main questions. First, there is definition and measurement. What are the constituents of the deficit? Issues such as contingent liabilities, unfunded liabilities, c...

Risk analysis involves the development of the probability distribution for the measure of effectiveness. The risk associated with an investment alternative is generally either given as the possibility of an unfavorable value of the measure of effectiveness or measured by the variance of the measure of effectiveness. In an uncertain economic decision environment, an expert’s knowledge about disc...