Abstract
This study aims to propose a novel model for the determination of depreciation in an environment of uncertainty. In the study, amortization methods were modified through interval type-2 fuzzy, and a new approach was proposed to help investors make decisions in an environment of cash flow uncertainty. We provide options among different depreciation alternatives for the future investment decisions of maritime companies through the revision of the straight-line depreciation method and the double-declining balance depreciation method. The fuzzy depreciation alternatives we suggest in our study are not only suitable for maritime companies, but also companies in different industries.
Highlights
The concept of depreciation is widely applied to protect working capital
This study aims to propose a novel model for the determination of depreciation in an environment of uncertainty
We proposed the novel depreciation approach in an environment of uncertainty using the IT2FSs method
Summary
The concept of depreciation is widely applied to protect working capital. It is related to converting the cost of the asset into expenses to ensure that the fixed asset, which loses its value over time and/or as it wears out due to use, is fully or partially covered. There are only a few studies on determining which depreciation method is more appropriate in an environment where future cash flows are uncertain. In this context, some studies which suggest optimal depreciation methods in such conditions are Berg et al 2001; Berg and Moore 1989. This study aims to help make more accurate investment decisions by using fuzzy numbers for the amount of future depreciation It proposes a model for evaluating investments in times when cash flows are uncertain, and in times when depreciation is uncertain.
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