B et al. (2005) describe an approach for using traditional decision analysis tools to solve real-option valuation problems. Their approach calls for a mix of discounted cash flow analysis and risk-neutral valuation methods and is implemented using Monte Carlo simulation and binomial decision trees. In this note, I critique their approach and discuss some alternative approaches for solving these...

Traditional and standard discounted cash flow valuation techniques are unable to deal with a variety of options contained in lease contracts. In the UK, the most important embedded option is the upward-only rent review. This becomes more valuable to the landlord in an era of low inflation, as nominal market rents are more likely to fall. Lease contracts are freely negotiated between landlord an...

Numerous research have been discovered to developed internationalization process model (investment to other country market). Like Johanson and Vahlne, they are among the first to discuss the internationalization process model. There are four key items underlying Johanson and Vahlne’s model, those are market knowledge, market commitment, commitment decision, and current activities. However, many...

This paper follows the discounted cash flow (DCF) approach to investigate inventory replenishment problem for EOQ model with defective items taking account of time value of money. First, this paper shows that the present value of the total variable cost for the infinite planning horizon is a convex function. Second, this paper derives bounds to determine the optimal cycle time under minimum val...

Solar-powered agricultural irrigation is an attractive application of renewable energy. However, to be practical it must be both technically and economically feasible. Here, a method is presented for calculating the feasibility of photovoltaic-powered (PVP) irrigation. The feasibility is expressed as a function of location, which includes climate data, aquifer depth and cost, including local po...

The study aimed to analyze the financial feasibility of implementing robotic milking on a dairy farm in western Santa Catarina/Brazil. This is descriptive case with qualitative basis using semi-structured interviews. Based cost measurement for implementation period activity 2022, comparative analysis was made incremental cash flow relative transition from conventional milking. One major finding...

In calculating recoverable amount of cash generating units (CGUs) under the implementation value in use approach, discount rate selection represents a central point deciding magnitude impairment charges Hong Kong Financial Reporting Standards (HKFRSs). The discretion discounted flow model (DCF) could be used opportunistically to misstate losses for benefit financial statement preparers and caus...

Many models have been developed to assist contractors and clients in their cash flow forecasting. The majority of these have been based on standard cash flow S-curves, developed using the traditional manual approach, mathematical and statistical models. Many of these models failed to consider and analyse the factors responsible for the considerable variations in the modelled cash flow profiles....

As the front-end to product and system lifecycles, research and development activities serve as engines of value creation. By nature, though, R&D involves significant uncertainty. As such, it often is viewed as an investment problem, whereby funds are invested in ventures under risk, with the hope of achieving future value. This paper investigates the use of organizational simulation to analyze...

Valuating start-ups, especially at early stages, is a challenge given the lack of historical data and many uncertain factors about the future. This article presents a methodology for the valuation of early stage start-ups that we have proven in practice. The risk linked to a start-up is expressed through an individual beta coefficient as important component of the discounting factor within a di...