Search results for "Present value"
showing 10 items of 44 documents
Incentive Properties of Residual Income when There is an Option to Wait
2005
Performance measures based on residual income are increasingly popular. The academic literature shows that residual income has important incentive properties when management bases investment decisions on the net present value (NPV) rule. My analysis focuses on the case in which investment decisions can be postponed, when management must extend the simple NPV rule by considering an option value. My analysis shows that some important incentive properties of residual income still hold when there is an option to wait, but only when the residual income measure is correctly adjusted. I also provide an incentive-based explanation of why the capital charge rate within firms is often significantly h…
Comparison between Different Dynamic Reconfigurations of Electrical Connections for partially shaded PV Modules
2018
This paper presents an economical investigation on the benefits related to the employment of reconfiguration systems for photovoltaic plants. More in detail, different structures of reconfigurators are proposed and, in order to evaluate the economical convenience on their installation, the Net Present Value is used as a validation element. Significant results are carried out from the proposed analysis.
Economic assessment of sicilian loquat orchards
2015
The majority of Italian production of loquat (Eriobotrya japonica) derives from the Palermo province, along the northern Sicilian coast. However, this area is characterized by family orchards, traditional cultural techniques, and inadequate commercial organization. These appear to affect negatively the production costs and reduce the farmersâ income, decreasing the competitiveness of Sicilian loquat orchards. This study evaluates the economic viability of Sicilian loquat orchards by means of cost-benefit analysis (CBA). In particular, for the investment assessment some financial indicators have been calculated such as net present value (NPV), discounted payback time (DPBT), and internal r…
A real options game of alliance timing decisions in biopharmaceutical research and development
2017
Abstract In this article we examine the alliance timing trade-off facing both pharmaceutical and biotech firms in a stochastic and competitive environment. Specifically, we introduce a real options game (ROG), where a pharmaceutical company can choose between two competing biotech firms by sequentially offering a licensing deal early or late in the new drug development process. We find that, when the alliance raises the drug market value significantly, the agreement is signed late in the drug development process. This suggests that the postponement effect implied by the use of real options prevails over the biotech firms’ competition effect, which would instead play in favor of an early agr…
Converting Retirement Benefit into a Life Care Annuity with Graded Benefits: How Costly Would it Actually Be?
2016
This paper deals with life care annuities, i.e. bundled products comprising a life annuity and long-term care insurance. It aims to assess the cost of converting retirement benefit into a life care annuity with graded benefits using a pre-existing public pay-as-you-go pension scheme. With this objective in mind, we present an actuarial method based on array calculus for valuing this type of life care annuity. The health dynamics of the annuitant rely on a reversible illness-death multistate framework. The paper contains a numerical example in which mortality and disability assumptions are based on data from the USA and Australia, although this should be viewed simply as an illustration. In …
Concurrent optimization of size and switch-on priority of a multisource energy system for a commercial building application
2015
Abstract In recent years, the governments of most nations have pledged to (i) limit carbon dioxide emissions, (ii) reduce primary energy consumption by increasing production, distribution and end-use efficiency and (iii) increase the utilization of renewable energy sources. In general, these goals are pursued separately by law, by subsidizing renewable energy technologies, reducing the demand or using high efficiency technologies. In this context, multi-source systems for the fulfillment of energy demands are highly advantageous because they are based on different technologies which use renewable, partially renewable and fossil energy sources. However, the main issues of multi-source system…
Techno-economical inspection of high-speed Internet connection for trains
2008
Some attractive service scenarios for Railways' Intelligent Transport Systems (RITS) in three different user segments, that is, passengers, freight companies and train operator's in-house customers, are presented. The case study covers the analysis of customer needs and techno-economic evaluations. The analysis indicates that Flash-OFDM technology provides promising pre-stage solution for the train connections in Finland. Also, the WiMAX-based high-speed Internet access for passengers may be profitable in the most heavily operated railway leg in Finland. The sensitivity analysis shows that the most crucial parameters for the case are `User Share', `Average Revenue per User' and `WiMAX Cell …
New development opportunities for the craft brewing segment: the case study of a micro-malthouse
2017
In Italy in the past few years, the number of small breweries penetrating the craft beer sector has grown exponentially. Craft producers intend to give a strong added value and a local character to their production in different ways. One of these is the use of malt derived from small batches of local cereals and pseudo cereals. The aim of this study is the assessment of investment profitability, through a cost-benefit analysis (CBA), for a compact and a modular micro-malting plant in Sicily (Southern Italy). The CBA for a micro-malthouse was carried out considering both installation and operating costs. Net present value (NPV), discounted benefit-cost ratio (DBCR) and internal rate of retur…
An analysis of feed’in tariffs for solar PV in six representative countries of the European Union
2014
Abstract In this paper, after a brief review on the main support policies for Photovoltaic (PV) systems in Europe, the specific situations of six representative countries (France, Germany, Greece, Italy, Spain and the U.K.) are examined, with the purpose of highlighting the main differences in the implementation of the feed’in tariff (FiT) support policies adopted for PV systems. In particular, a comparison based on the calculation of economic indexes, as the Discounted Cash Flows (DCF), the Pay-Back-Period (PBP), the Net Present Value (NPV) and the Internal Rate of Return (IRR), for different sized PV systems shows that a specific FiT can sometimes be inconvenient for the producer and that…
Incorporating stand level risk management options into forest decision support systems
2018
Aim of study: To examine methods of incorporating risk and uncertainty to stand level forest decisions. Area of study: A case study examines a small forest holding from Jonkoping, Sweden. Material and methods: We incorporate empirically estimated uncertainty into the simulation through a Monte Carlo approach when simulating the forest stands for the next 100 years. For the iterations of the Monte Carlo approach, errors were incorporated into the input data which was simulated according to the Heureka decision support system. Both the Value at Risk and the Conditional Value at Risk of the net present value are evaluated for each simulated stand. Main results: Visual representation of the er…