This work makes a comparative analysis of the evaluation of an investment project, considering two approaches, one with cash flows at constant prices and the other at current prices. The goal is to determine which of these two approaches is best for project evaluation to make the right...

The purpose of this article is to outline various cost-benefit financial evaluation methods for use in project appraisal with regard to private capital investment projects with the inclusion of uncertainty and risk allowance factors in determining the net expected financial return from a given...

This paper illustrates an innovative approach to financial modeling of engineering decisionmaking and industrial projects. The approach is a minimal one, grounded as it is on three notions, two laws, and one matrix that combines them, called Split-Screen Matrix (SSM). This split-screen approach...

As the objective of the capital budgeting is to add values to the wealth of an owner of a business, the capital budgeting primarily insists the recovery of investments made in the projects. To improve the owner’s wealth, it is important to evaluate and identify profitable projects using some...

This paper fills a very important gap in the literature with a straightforward methodology that generalizes the classic Modigliani and Miller results and provides correct values for the expected return on equity and for the weighted average cost of capital (WACC). After some confusing debate in...

In modern businesses, firms face new challenges of managerial retention in capital budgeting process. We consider a model in which a manager privately observes the capital productivity of a project and has access to multiple outside financing options. We show that if the manager can obtain...

One of the most important criteria in classifying investment projects is economic dependence between new and existing projects. Economic dependence causes the neccessity of specific information in decision making process. The prerequisite of shaping incremental effects projections is to take...

The survey findings indicate the existence of gap between theory and practice of capital budgeting. Standard appraisal methods have shown a wider project value discrepancy, which is beyond and above the contingency limit. In addition, the research has found the growing trend in the use of value...

Analytical techniques usually employed in making project selection decisions are of strictly financial origin and, traditionally, tend to consider projects as separate entities from undertaking organizations. This fact underestimates potential negative (and pervasive) outcomes considering that...