We provide a general valuation approach for capital budgeting decisions involving the modularization in the design of a system. Within the framework developed by Baldwin and Clark (2000), we implement a valuation approach using a numerical procedure based on the Least Squares Monte Carlo method proposed by Longstaff and Schwartz (2001). The approach is accurate, general and flexible.

Abstract: 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...

This paper presents a linear programming model in which a portfolio of projects is modelled as decision trees. It is also shown how scenario thinking can be combined with a capital budgeting model in order to permit uncertainty considerations. Furthermore, the programming of an option to wait and synergies of two projects is described.