Discounted Cash Flow Research Articles

A Case Study on Multi-Real-Option-Integrated STO-PF Models for Strengthening Capital Structures in Real Estate Development

This study examines the integration of multi-real-option valuation and security token offering (STO) as an innovative approach to real estate project financing. The case study of Aspen Resort Development serves to illustrate this methodology. The traditional discounted cash flow (DCF) method is frequently ill-suited to the dynamic and uncertain nature of long-term real estate projects, particularly in regard to the ability to adapt to market fluctuations. In order to address these limitations, this study employs a multi-real-option model with a binomial lattice framework, thereby facilitating flexible decision-making in various investment stages. The analysis demonstrates that the STO-based project financing (STO-PF) model offers enhanced financial performance and strategic advantages in comparison to the conventional DCF approach. Furthermore, the STO-PF model has the effect of increasing liquidity, expanding investment accessibility, and improving risk management through the utilization of digital platforms. By quantifying the project’s extended net present value (ENPV), the integration of STOs with real-options models can facilitate optimal investment decisions in the context of a high level of market volatility. Consequently, the STO-PF model is determined to yield a project value (E) of USD 7.34 million and a real-options value (ROV) of USD 3.69 million. This is markedly higher than the net present value (NPV) of USD 3.65 million derived from the traditional project finance (PF) model. Furthermore, the put option for the second investment stage contributes USD 16.45 million to the overall value of the project, thereby demonstrating the flexibility and strategic advantages of the STO framework in comparison to static NPV analysis. The Aspen project serves as a case study, demonstrating the financial viability of phased investments in dynamic market conditions. It contributes to the theoretical understanding of STO-based financing and provides practical insights for developers seeking flexible and innovative financing solutions in the real estate sector. Further research is required to confirm the applicability of STOs in diverse market environments and regulatory contexts. Additionally, in-depth research is necessary to integrate emerging technologies, such as artificial intelligence and machine learning, into multi-real-option-based financial platforms. This integration aims to enhance financial modeling and decision-making processes, as well as to facilitate the integration of digital technologies in this field. Only then can the development and implementation of smart construction development advance.

COST EVALUATION OF EXISTING PRODUCTION

The issues of cost evaluation of existing production have been in the focal point while in transit to market economy. The article analyses the notion of “the cost of existing enterprise” (CEE) defined in scientific literature and official documentation such research publications, thesauruses, textbooks, documents issued by RF Ministry of Finance. The publications of those engaged in accounting are also in the focal point of this submission. The analysis made is intended to help to remedy the disadvantages of existing cost evaluation methodology. The author provides comparative analysis of interpretation of this notion, adjust its contents and justify the necessity of counting such cost components as goodwill in cost evaluation of an enterprise. The methodology of the profitable approach to estimating the cost of production based on discounted cash flows in an unlimited billing period is analyzed, as well as the presented direct method for calculating the CEE by the amount of complex non-current and current capital used for the reporting period. The article introduces the methodology of CEE calculations based on the total value of capital (current assets and fixed assets). The formula of CEE calculations with goodwill counted is viewed as seller’s extra earnings transformed in a particular part of future balance costs of a buyer company, which is increasing its capital costs and reducing its production efficiency to some average industry standard. The article is aimed at managers, entrepreneurs, investors, professional appraisers, employees of investment companies and banks, teachers, students and postgraduate students.

Application of four pricing models for orphan medicines: a case study for lumasiran

Abstract Background The combination of high prices and uncertain effectiveness is a growing challenge in the field of orphan medicines, hampering health technology assessments. Hence, new methods for establishing price benchmarks might be necessary to support reimbursement negotiations. In this study, we applied several pricing models containing cost-based elements to the case of lumasiran for treating primary hyperoxaluria type 1. Methods Price ranges were calculated by estimating minimum and maximum scenarios for four pricing models: Novel Cancer Pricing Model (NCP-model), AIM Model for Innovative Medicines (AIM-model), Discounted Cash Flow model (DCF-model), and the Real-Option Rate Of Return model (ROROR-model). Data was gathered from disease registries, scientific literature, Security and Exchange Committee filings, and expert opinion. A sensitivity analysis was performed to assess the parameters with the largest influence. Results Outcomes resulting from the NCP-model ranged between €87,000 and €224,000 per patient per year, between €33,000 and €340,000 for the AIM-model, between €182,000 and €748,000 for the DCF-model, and between €81,000 and €273,000 for the ROROR-model. Conclusion Outcomes of the four pricing models show wide and heterogeneous price ranges. The DCF-model might be most compatible with the case of lumasiran, due to inclusion of parameters for prevalence, incidence, prescription restrictions and cost of capital. The minimum DCF price could serve as a starting point for pricing and reimbursement negotiations. Uncertainties can be solved by more transparency on input variables.

Analysis of Optimal Stock Performance Using the Discounted Cash Flow Method and Stock Price Forecasting Using the Holt-Winters Method

The high liquidity of PT Perusahaan Gas Negara Tbk shares and significant fluctuations in share prices create uncertainty that requires in-depth analysis. Stock performance analysis is carried out with 2 stages in outline, namely the stages of fundamental analysis and technical analysis. Fundamental analysis is carried out to analyze optimal stock performance, one of which is by using the discounted cash flow (DCF) method. Technical analysis is used to determine the condition of stock performance in the future by forecasting stock prices using the Holt-Winters forecasting method. The objectives of this study are to analyze optimal stock performance, forecast stock prices, and evaluate forecasting results. The data used is PGN's 2023 annual report and daily data on PGN's stock price for the period January 1, 2019, to December 31, 2023, totalling 1,231 data. The results of the optimal stock performance analysis show that PGN's stock performance is declared optimal with an intrinsic value of 3,149.18, which is greater than the current stock price (undervalued). The results of stock price forecasting show that the forecasting results follow the actual data pattern, with an accuracy value using MAPE (mean absolute percentage error ) of 10.9%, it is stated that the forecasting performance has performed well.

Stock Valuation of PT Widodo Makmur Perkasa TBK by Using Discounted Cash Flow Method and Relative Valuation

The emergence of Covid-19 in Indonesia caused an economic decline in 2019-2020. This also has an impact on the capital market in Indonesia, which is shown by the decline in the Composite Stock Price Index (IHSG) which was seen at the beginning of 2020 at the level of 6,300 and decreased to 3,900 in March 2020. However, the number of investors in Indonesia has increased every year, the same as the increase number of companies that have conducted an initial public offering (IPO) and listed their shares on the Indonesian Stock Exchange (BEI). One of the companies conducting an initial public offering is PT Widodo Makmur Perkasa Tbl. (WMPP) in 2021. This company has the potential to continue to grow knowing that Indonesia’s population is expected to continue to grow at a growth rate of 1.25 percent per year, and the Indonesian economy will grow by 5.31 percent in 2022, exceeding the growth rate in 2021 it is 3.70 percent, and is expected to continue to increase every year. In addition, the urban population in Indonesia is expected to reach 66.6% in 2035 and 70% in 2045. This study aims to find out whether WMPP companies are valued too low or too high using the DCF and Relative Valuation methods. Apart from that, this research also carried out external and internal analysis to see the company’s potential. The method used to analyze external conditions in company analysis is PESTEL and the author uses VRIO analysis to determine internal conditions. The findings of the study reveal that this company’s industrial sector is attractive to investors because this industry has a significant contribution to the development of Indonesia’s GDP; this can be a trigger for the Government of Indonesia to continue to support this sector. Apart from that, increasing people’s income and the company’s concern for the environment can be an attraction for investors. However, the only problem is disease outbreaks in cows and chickens which can trigger a decline in income. Based on the result of the VRIO analysis, this company has sustainable competitive advantages such as a large number of assets with quite a lot of production capacity. This company also has a vertical integration business and diverse products & business units. The result of the WMPP company valuation based on relative valuation show that the WMPP company has a lower PER, PBV and EV to EBITDA than those of the average of similar companies or can be said to be undervalued. However, the WMPP company’s EV to Sales is higher than that of the average of similar companies, indicating that the stock is overvalued. Furthermore, based on the Discounted Cash Flow (DCF) result, the intrinsic value of this company is IDR -55, but the share price is IDR 50. This shows that WMPP is overvalued.

Introduction and Consultation on the Indonesia's Oil and Gas Sharing Contract at CNG Co.

Indonesia's oil and gas sector has traditionally employed Production Sharing Contracts (PSCs) to regulate the sharing of revenues between the government and contractors. Two key PSC models are used: PSC Cost Recovery and PSC Gross Split. The PSC Cost Recovery model allows contractors to recover their exploration and production costs before profits are shared, providing financial protection but reducing long-term profitability. Conversely, the PSC Gross Split model, introduced in 2017, offers a simpler revenue-sharing mechanism, eliminating cost recovery and directly splitting gross revenue between the government and contractors. This study analyzes the financial implications of both models using economic simulations, focusing on key indicators like net cash flow, net present value (NPV), pay-out time, and discounted cash flow (DCF) rate of return. Results show that the Gross Split model generates significantly higher gross revenue ($420.908 million) than Cost Recovery ($46.362 million), but at the cost of greater financial risks for contractors due to higher upfront investments and operating costs. The Gross Split model also provides higher long-term returns, with a net cash flow of $67.138 million compared to $8.252 million in Cost Recovery. However, the pay-out time is longer, and the DCF rate of return is slightly lower (29.95% vs. 31.8%). Ultimately, PSC Gross Split is more suited for contractors with higher risk tolerance and capital resources, while PSC Cost Recovery may be preferable for smaller contractors seeking to minimize financial risks. Both models offer distinct advantages depending on the contractor’s financial capacity and risk appetite.

Valuation of State-Owned Enterprises in the Process of Privatisation in Ethiopia: Procedures and Methods

Real property valuation is a vital component in the privatization of state-owned enterprises (SOEs). In Ethiopia, real property valuation is a difficult task as there is a lack of skilled manpower in the field, no adequate real estate market, and legal gaps in valuation. In addition literatures are scant about how real property valuation is done. Therefore, this study examines real property valuation procedures and challenges in the process of privatization of state-owned enterprises (SOEs) in Ethiopia. To achieve the objective of the study, qualitative research approach is applied. The target populations of the study were appraisers who participated in the valuation of SOEs. A purposive sampling technique was used to select respondents. Primary data were collected from appraisers using key informant interview (KII). Document review from different secondary sources was employed to triangulate the KIIs. The data were analyzed using thematic grouping and narration. The study found that for profitable enterprises Depreciated Replacement Cost (DRC) and Discounted Cash Flow (DCF) methods have been applied while for loss-making enterprises the DRC method has been used. These methods are selected based on the preceding three years of data. Moreover, these valuation methods are not applied in a proper way and the basis of selecting these methods are unjustifiable. The valuation result of SOEs, do not reported in a standard valuation reports formats. Lack of skilled manpower, inappropriate use of the valuation approaches, inappropriate base for selecting techniques of valuation, and organizational inefficiency are the key problems faced during valuation. To improve the situation market principles should be applied in the valuation of SOEs for privatization purposes in Ethiopia. These can be achieved by introducing strong institutions responsible for valuation regulations at the central level.

Meta analysis of business valuation solutions – are AI based methods better?

Purpose of the article – this article addresses the challenge of accurately assessing business value in today's dynamic environment, exploring the limitations of traditional valuation methods and the potential of modern, technology-driven approaches. Research methodology – the study uses qualitative research methods, including content analysis, deductive reasoning, and comparative analysis, to review various business valuation techniques. Findings – the research finds that traditional methods like Discounted Cash Flow and Relative Valuation are outdated, failing to capture all value factors. Modern approaches, such as simulation-based valuation, machine learning, and neural networks, combine traditional methods with advanced techniques. These methodologies utilize vast datasets and sophisticated algorithms, enhancing predictive accuracy and understanding of market dynamics. Neural networks excel in analysing complex patterns and adapting to market shifts. However, no single method can capture all nuances, necessitating diverse approaches and acknowledging the subjective nature of valuations. Practical implications – the findings suggest that incorporating advanced methodologies can improve business valuations, leading to better decision-making and a deeper understanding of market dynamics and intrinsic value. Originality/Value – this study uniquely examines the transition from traditional to modern valuation methods, highlighting the superior performance of neural networks and the need for a multifaceted approach to business valuation.

Navigating the financial frontier: a case of investment decision-making in the wake of Reliance Industries Limited’s demerger

Learning outcomes This case study aims to equip students with the skills to evaluate the rationale behind a demerger decision, derive the enterprise value and equity value of the conglomerate using the discounted cash flow valuation modelling and assess the company’s value based on qualitative parameters using economy industry company analysis and strengths, weaknesses, opportunities and threats analysis. Case overview/synopsis This case study delves into the demerger of the financial services arm of Reliance Industries Limited into a separate unit named Jio Financial Services Limited. The independence of this unit is anticipated to enhance shareholder value and unlock the conglomerate discount. In light of these factors, a fundamental analysis of the firm is conducted to determine whether it presents a viable investment opportunity. Complexity academic level This case study is suitable for -graduate and postgraduate courses in financial management. Supplementary materials Teaching notes are available for educators only. Subject code CSS 1: Accounting and finance.

Diversifying the Business of Oil and Gas Companies in the Context of Global Climate Policy

In 2019, Russia, being a climate-conscious country, ratified the Kyoto Protocol to the UN Framework Convention on Climate Change caused by anthropogenic emissions of greenhouse gases. The increase in the emissions is primarily driven by the advancements in energy production. The existing level of technology for processing and using raw materials in many energy industries leads to dangerous environmental pollution and causes an increase in environmental problems. Many companies have adopted their carbon neutrality strategies to use "green energy" based on ESG criteria, which allows them to increase their competitive advantages. Achieving carbon neutrality involves minimizing direct emissions during production processes or shifting to renewable energy sources. The paper examines the transformation of the oil and gas companies towards cutting greenhouse gas emissions and analyzes the mechanisms for achieving decarbonization. To assess the effectiveness of investment projects in the field of low-carbon energy, the paper analyzes an approach and proposes a dynamic simulation model based on a modification of the discounted cash flow method. The model is tested under the assumption that carbon regulation is carried out through the introduction of a carbon border tax.

Ore-Chestrating Net-Zero: A Techno-Economic Comparison of Lithium Batteries and Vanadium Flow Batteries in a Western Australian Mine Site

Background: Remote mining operations in Western Australia are faced with the challenge of transitioning to renewable energy solutions to achieve net-zero carbon emissions by 2050. A promising strategy for these off-grid sites is to integrate wind and solar energy with battery storage systems, reducing their reliance on fossil fuel-based energy sources like natural gas turbines. Objectives: This study investigates the feasibility of using two types of battery energy storage system – Lithium-Ion (Li-ion) and Vanadium Flow Batteries (VFB) – in off-grid Western Australian mine sites to achieve the net-zero emissions reduction target. Li-ion batteries possess the advantages of higher energy density, higher efficiency and widespread commercial availability whilst VFBs offer scalability, long cycle life and inherent safety features. Methods: A microgrid model was developed using HOMER (Hybrid Optimization of Multiple Energy Resources) Pro version 3.17.1. Key economic parameters – including the capital, operations and maintenance costs of wind turbines, photovoltaic panels, natural gas turbines, converters and batteries – were integrated into the model. Results: For each storage configuration, the simulation results which yielded the lowest discounted cash flows relative to a configuration in which only natural gas turbines were used to meet 100% of the projected load may be seen in Figure 1. The 4-hr Li-ion batteries (80% DOD) had the lowest initial capital costs for both the 0% and 10% capacity shortage simulations of all cases which met the minimum renewable fraction criteria. This was because of the higher round trip efficiency of the Li-ion batteries when compared to VFBs and the high DOD when compared to the 60% DOD Li-ion simulations. These factors resulted in fewer MWh of 4-hr Li-ion packs being needed to meet the projected load. However, the 80% DOD also resulted in the Li-ion batteries needing to be replaced more frequently than the 60% DOD Li-ion batteries, as shown by the sudden drops in the Total Discounted Cash Flow plot. By the end of the 20-year simulation period, the configurations supported by 10-hour duration VFBs yielded the highest cash flow increase due to their longer lifespan.Figure 1. Cumulative cash flow over a 20-year period for a Western Australian mine site microgrid implementing Li-ion batteries and VFBs.All storage options dramatically reduced the levelised cost of energy (LCOE) when compared to the ‘No Storage’ configurations, as shown in Table 1. This was due to a greater amount of solar and wind power generation being required when no storage was present, as shown in the Total Power Capacity results in Figure 1. These results also revealed that when storage was present, the simulations which produced the lowest net present cost had no wind power generation. This was due to a significant overlap in the periods of peak wind and solar generation in the region and the relatively low projected cost of solar generation. The results also showed that allowing a capacity shortage of 10% dramatically reduced the LCOE and cumulative costs associated with each storage type; however, further analysis is needed to assess the impact of shutting down the mine site during these shortage periods.Table 1. Levelized cost of energy associated with each storage configuration over the twenty-year simulation period. System Levelized Cost of Energy (AUD/kWh) 0% Capacity Shortage 10% Capacity Shortage Natural Gas Turbines Only (0% Renewable Fraction) 0.095 0.089 Solar + Natural Gas Turbines + Wind + No Storage (50% Renewable Fraction) 0.180 0.143 Solar + Natural Gas Turbines + 4-hr Li-Ion Packs (60% DOD) (50% Renewable Fraction) 0.124 0.112 Solar + Natural Gas Turbines + 4-hr Li-Ion Packs (80% DOD) (50% Renewable Fraction) 0.119 0.109 Solar + Natural Gas Turbines + 4-hr VFB Packs (80% DOD) (50% Renewable Fraction) 0.108 0.101 Solar + Natural Gas Turbines + 10-hr VFB Packs (80% DOD) (50% Renewable Fraction) 0.109 0.099 Figure 1

Explaining the diversity in findings on derivatives uses and firm value: Insights from firms' commodity futures use

Empirical studies show mixed and inconclusive findings on the relationship between derivatives uses and firm value, with reasons remaining unclear. This paper addresses this issue by applying the enterprise discounted cash flow (DCF) model. Based on commodity futures uses in China's non-financial publicly listed companies, this paper shows that the use of commodity futures, either for the purpose of hedging or speculation, diminishes the firm value. Specifically, the hedging ones damage the operational portion of firm value through a modest decline in free cash flow—primarily attributable to a substantial increase in capital expenditure—and a relatively stable cost of capital. Conversely, the speculation ones harm the non-operating portion of firm value via a steep rise in the cost of capital and the investment gains. Our findings show that hedging and speculation derivatives impact different aspects of firm value through cash flow and cost of capital channels. These findings help to explain the diverse empirical findings on the relationship between derivatives and firm value.

Valuation Methodologies for Start-ups in Indonesia: A Bibliometric Analysis

The start-up industry in Indonesia is receiving a lot of interest from businessmen, investors, and researchers. Reliable valuation techniques are essential for investors and business owners alike in Indonesia’s dynamic startup ecosystem. This study maps the structure of startup valuation research in the Indonesian setting using bibliometric analysis. It also examines how research subjects have changed over time and evaluates the significance of key studies. This study carefully examines the usual traits of new businesses in Indonesia, concentrating on both financial and non-financial factors. To illustrate the entire strategy adopted, start-up valuations frequently mix quantitative techniques like discounted cash flow (DCF) with qualitative assessments. There are still several calculating components that are not standardized when doing assessments at start-up. Therefore, valuation is more art than science. This bibliometric analysis delivers unique insights into research by syncing and visualizing knowledge networks, helping entrepreneurs, investors, and policy makers to comprehend the existing environment and future direction of startup assessment approaches in Indonesia. It uses co-word analysis to examine this topic’s knowledge structure. As a result, the research finds 163 journal articles related to start-up valuation. In addition, four clusters are found to describe the current state of start-up valuation: start-up, investment, venture capital and discounted cash flow. Keywords: start-ups, Indonesia, valuation, bibliomeric analysis

Navigating Capital Budgeting Dilemmas: Theory Versus Practice at Clarence Infra Projects Ltd

The case study explores the capital budgeting challenges faced by Clarence Infra Projects Ltd, a company deeply committed to maximising shareholder value while navigating the complex world of capital investments. Despite their dedication to value maximisation, the company sometimes made decisions that contradicted this principle due to practical considerations. These contradictions highlight the real-world complexities of decision-making and the need to balance theory with pragmatism. The study presents three investment choices: solar power expansion, wind farm development, and hydroelectric power plant, each with distinct cash flow patterns. The managers traditionally used the payback period method, but they also employed the discounted cash flow methods, including net present value and internal rate of return, to evaluate the projects. Sensitivity analysis under various reduction scenarios is conducted to assess the resilience of the projects. Ultimately, the case highlights the importance of aligning financial theory with real-world complexities to make informed investment decisions.

Wealth maximisation and residential energy-efficiency retrofits: Insights from a real options model

The slow adoption of residential energy-efficiency retrofits continues to hamper the energy transition. We study incentives for adoption by proposing a model of optimal investment under uncertainty where the wealth-maximising agent has the option to delay. Stochastic portfolio returns and energy prices are taken into account. An extension of the model where the energy carrier is switched, e.g. from gas to electricity, is also considered. Exercise boundaries for the optimal stopping problem are estimated numerically for recent case studies of German buildings. Investment is generally not optimal at current energy prices and market conditions. Increasing correlation between gas and electricity prices erodes the value of technology switching. Comparative statics reveal that energy-efficiency investments become optimal at relatively lower energy prices as wealth, income, and savings behaviour increase, and portfolio drift and volatility decrease. Consequently, incentive to invest in retrofits is far more heterogeneous along wealth dimensions than standard discounted cash flow analyses suggest. An examination of retrofit subsidies demonstrates how free-riding by wealthier agents occurs when subsidies are not appropriately targeted. We show that the pursuit of economic efficiency in subsidy design might have regressive effects on the wealth distribution.

Drug pricing models, no 'one-size-fits-all' approach: a systematic review and critical evaluation of pricing models in an evolving pharmaceutical landscape.

Access to new medicines is crucial for patients but increasingly sparks discussion due to high prices. Simultaneously, the growing emphasis on specialized products and uncertainty surrounding the long-term effectiveness of new drug classes brought to the market underscore the need for innovative pricing approaches. A systematic literature review of pharmaceutical pricing models, accompanied by a critical appraisal, was conducted to offer insights contributing to novel approaches balancing sustainable pharmaceutical innovation with affordability and accessibility for patients. Six different pricing models are identified: value based pricing, basic cost-based pricing, and four more comprehensive pricing models incorporating numerous elements: the cancer-drug-pricing model, AIM model, (Nuijtens) discounted cash flow, and the real-option rate of return method. Although there are many similarities among the models, each has unique assumptions for implementation. For instance, all models except for the standard incremental cost-effectiveness ratio and basic cost-based pricing consider the number of eligible patients and the remaining patent period. Only the AIM model and the Nuijtens discounted cash flow model use lump sums. Both the latter and the real-option rate of return method explicitly include the cost of capital as a major cost-based component. Recognizing the diverse applications of each model highlights the need for more differential and dynamic pricing tailored to the characteristics and therapeutic areas of each drug. Additionally, the study underscores the importance of cost transparency in achieving this goal. Consequently, these findings can help stakeholders develop sustainable and affordable drug pricing mechanisms that address the complexities of the ever-changing pharmaceutical landscape.

ОЦІНЮВАННЯ ОПТИМАЛЬНИХ ТЕРМІНІВ СЛУЖБИ ОСНОВНИХ ВИРОБНИЧИХ ЗАСОБІВ ПІДПРИЄМСТВ У ПРОЦЕСІ ЇХ ІННОВАЦІЙНОГО ОНОВЛЕННЯ

Purpose. The efficiency of the enterprise's financial and economic activity is largely determined by the availability of the necessary production potential, the main component of which is fixed assets (FA). Currently, Ukrainian enterprises are characterized by a high level of FA’s wear and tear, which is the leading factor of low production efficiency. The current situation explains the need for significant changes in the area of updating the fixed assets, and necessitates the development of new methodological approaches and relevant practical recommendations. In this connection, the problem of choosing the process of reproduction of fixed assets and determining the expediency of carrying out these measures becomes especially relevant. At the same time, the terms of use of fixed assets are the main parameter in the process of their innovative renewal, in connection with which the problem of quantitative assessment of the optimal terms of operation of the equipment arises. The purpose of the article is to investigate and substantiate the concept of the optimal period of use of fixed assets, as well as to analyze how deviations from this period affect the investment support of the process of innovative renewal of the FA by constructing relevant equations with discounting of cash flows. Design/methodology/approach. The article uses the cash flow discounting method, iterative and balance methods to calculate the optimal service life of the FA and to analyze the impact of deviations from these terms on investment support for the innovative renewal of fixed assets. The obtained calculation results are visually displayed using tables and a graphic method. Findings. The article examines several methods for determining the optimal service life of the fixed production assets of enterprises and the moment of their reproduction. Three main approaches to management decision-making regarding the expediency of updating FA are identified and studied: cost-effective, profitable, and comparative. The main methods and criteria for choosing the moment of replacement of existing FA with new ones were considered, and their advantages and disadvantages were evaluated. The author proposes and substantiates an approach to determining the optimal service life of the FA based on the use of equations with cash flow discounting. Corresponding numerical calculations are given. The influence of the deviation from the optimal FA’ operation period on the investment support for their innovative renewal was also assessed. Practical implications. The methodical and practical results obtained in the research process can be used to calculate the optimal service life of existing main production assets and the rational moment of their replacement with new ones, as well as in the development of the company's depreciation policy. Originality/value. The quantitative assessment of the equipment’s terms of use and its influence on the process of their renewal is important, since too long a period of use of fixed assets does not allow the timely introduction of new, more progressive types of equipment. At the same time, the significant shortening of the service life of the FA (with the same rate of depreciation) does not allow to accumulate the appropriate funds for renewal.

Investment Feasibility Analysis Using Discounted Cash Flow Valuation Method (Case Study: Gold Mine in Pit A PT XYZ)

Investment in the mining sector carries a high risk, so a comprehensive financial evaluation is required to ensure project feasibility. This study assesses the financial feasibility of gold mining investment in Pit A, PT XYZ, for the period 2025 to 2036. The purpose of this study is to evaluate the feasibility of the project through the analysis of key financial indicators such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period (PBP) using the Discounted Cash Flow (DCF) method. The DCF method was chosen due to its ability to project future cash flows and incorporate them into a comprehensive assessment of the potential benefits and risks of the project. In addition, sensitivity analysis was conducted to see the effect of changes in important variables such as revenue, cost of goods sold (COGS), and capital expenditure (capex) on the financial results of the project. The results show that the project is financially viable, with a positive NPV of US$404.16 million, an IRR of 52.10%, and a PBP of 3.32 years, all of which indicate a strong return on investment. Further sensitivity analysis shows that the project remains robust under various scenarios of changes in key variables. This study contributes to the investment evaluation literature in the mining sector by offering a more integrated approach to addressing investment uncertainty and risk through the combined use of the DCF method and sensitivity analysis.

MÉTODOS PARA ANÁLISE DE INVESTIMENTO: APRESENTAÇÃO TEÓRICA E PRÁTICA

This work aims to present the most commonly accepted methods for investment analysis, namely Net Present Value (NPV), Payback – with simple and discounted cash flow, Internal Rate of Return (IRR), and Modified Internal Rate of Return (MIRR). Conceptually, the work presents MIRR as an evolution of IRR, aiming to correct inherent problems with IRR, such as the analysis of cash flows with sequential positive and negative peaks, where the IRR method would generate multiple rates instead of a single rate for the project. This article also introduces the concept of the Average Attractiveness Rate. The study methodology used is bibliographic research, presenting the concept, theory, and application of each method while attempting to differentiate them. In the end, a practical example with values is presented, where a manager, in deciding whether or not to invest, considers the use of investment analysis methods for decision-making regarding the trade-off.

Cost of Illness Studiesin clinical depression Using Discounting Methods: A Comprehensive Analysis

Abstract:This research delves into the intricate domain of Cost of Illness (COI) studies, also known as Burden of Disease (BOD), with a specific focus on depressive disorders. Employing a bottom-up approach, the study meticulously scrutinizes the economic implications of depression at various levels, emphasizing direct and indirect costs. The analysis integrates a detailed exploration of diverse discounting methods, including Net Present Value (NPV) and Discounted Cash Flow (DCF), with a particular emphasis on the Indian context to comprehend unique socio-economic factors.Methodologically, the study systematically reviews scientific literature over the past decade, utilizing databases such as Web of Science and Google Scholar. The inclusion criteria prioritize patient-based studies related to the cost of illness associated with depression. The research adopts a comprehensive approach, considering various methodologies and discounting techniques to enhance the understanding of economic implications.The comparative analysis of the total cost of illness across diverse countries unravels significant variations, highlighting the intricate nature of healthcare expenditures and economic structures. Specific breakdowns for each country consider factors suchas currency exchange rates, inflation, and Purchasing Power Parity (PPP) adjustments, shedding light on the complexities involved.The study across five countries highlights significant variations in depression-related costs. Direct medical costs have a mean of $42,668 (SD=16,940) with a high t-statistic of 27.83 (p-value 0.001), emphasizing substantial differences. Direct non-medicalcosts average $27,171 (SD=13,220) with a t-statistic of 14.07 (p-value 0.001), indicating a notable economic burden beyond medical expenses. Indirect costs related to depression stand at a mean of $63,816 (SD=25,230), with a t-statistic of 35.30 (p-value 0.001), highlighting significant impacts on productivity and societal costs. The total cost of illness, encompassing both direct and indirect costs, averages $113,590 (SD=43,990), with a t-statistic of 49.49 (p-value 0.001), reflecting the extensive economic implications of depression across these diverse nations.In conclusion, this comprehensive analysis contributes depth to our understanding of the economic impact of depressive disorders, providing valuable insights for policymakers, healthcare providers, and researchers. The research underscores the multifacetednature of the economic burden of depression, emphasizing variations across countries and advocating for comprehensive, context-specific approaches in assessing and addressing global implications. Acknowledging challenges with discounting methods, the paper identifies opportunities for refining methodologies and improving economic evaluations in the future, emphasizing the importance of nuanced insights for effective policymaking and healthcare strategies on a global scale.