This paper analyzes the relations among different concepts such as earnings, profit, interest, rate, consumption, dividend, installment, cash flow, capital. It aims atembracing these notions in a unique conceptual "umbrella" , consisting of five perspectives: (1) accounting, (2) economic theory,...

This paper presents a proposal for evaluating real options. The existing models are not widely used by corporate managers as they are formally complex, rather difficult to understand and rest on strong implicit assumptions. We propose a possible alternative by using a fuzzy expert system that...

This paper makes use of a fuzzy expert system to evaluate a strategic investment. In particular, the model proposed aims at replicating the actual decision process accomplished by Florim S.p.a., an Italian ceramic tile firm which had the opportunity of buying a firm in the USA. The model is...

Il presente lavoro tratta del classico criterio di capital budgeting derivato dal CAPM,secondo il quale un investimento è conveniente se e solo se il suo tasso di rendimento atteso è maggiore del costo del capitale. Tale criterio è esposto, tra gli altri, da Rubinstein (1973) ed è...

Business economics does not provide any methodology for appraising strategic investments, relying on informal approaches. Conversely, financial economics offers us plenty of sophisticated mathematical models unsuitable for applications and based on unrealistic assumptions. This paper presents an...

The internal rate of return (IRR) is a widely used benchmark for assessing the reliability of the accounting rate of return (ROA) as a measure of economic profitability. We turn this reasoning process on its head by demonstrating that a suitable (weighted average) aggregation of ROAs better...

The recent notion of Average Internal Rate of Return (AIRR) [Magni 2010, The Engineering Economist, 55(2), 150-180] completely solves the long-standing problem of the internal rate of return (IRR). While the AIRR is a return measure, this paper presents a cash-flow measure, namely the ratio of...

The internal rate of return (IRR) is used extensively in the real estate sector, notwithstanding certain nagging deficiencies taught in most business school texts, such as that the IRR may have multiple solutions which cannot be reconciled; or that it may lead to decisions that are not consistent...

This paper analyzes the net-present-value (NPV) model, a keystone in economics: Behaviors and lines of reasoning of NPV-minded decision makers are observed and analyzed. As a result, one finds out that the NPV methodology is biased and its decision makers fall prey to various forms of fallacies...

This paper proposes a method for evaluating a project under certainty by means of a systemic outlook, which borrows from accounting the way of representing economic facts while replacing accounting values with cash values. The investor's net worth is regarded as a system whose structure changes...