Engineering Economist articles from March 2001

Engineering Economist archives from March 2001

REAL OPTIONS VALUATION AND ITS RELATIONSHIP TO BAYESIAN DECISION-MAKING METHODS.
March 22, 2001... ABSTRACT It is well accepted that conventional NPV criterion fails to capture investment flexibility, and the market approach using riskless-arbitrage-pricing is ideally suited to price real options. However, when valuing complex real...

FREE CASH FLOW (FCF), ECONOMIC VALUE ADDED (EVA[TM]), AND NET PRESENT VALUE (NPV): A RECONCILIATION OF VARIATIONS OF DISCOUNTED-CASH-FLOW (DCF) VALUATION.
March 22, 2001... ABSTRACT The paper assists the user of DCF methods by clearly setting forth the relationship of free-cash-flow (FCF) and economic value added (EVA[TM]) concepts to each other and to the more traditional applications of DCF thinking. We...

ESTIMATING THE COST OF EQUITY FOR CORPORATIONS THAT REPURCHASE: THEORY AND APPLICATION.(Financing Business)
March 22, 2001... ABSTRACT The standard discounted dividend model provides flawed estimates of the cost of equity when corporations repurchase shares, which many now do. A simulation model shows that the discounted dividend model, as customarily applied,...

INTERPRETATION OF THEORY-OF INTEREST APPLICATIONS USING THE "FRACTIONAL WITHDRAWAL" CONCEPT.
March 22, 2001... ABSTRACT A model for analysing a single initial deposit followed by a sequence of periodic cash outflows is developed. Instead of treating the cash outflows as monetary amounts, they are expressed as a fraction of the account balance and...