Net Present Value Of Investment Research Articles

A hazai gyermekvédelmi rendszer fejlesztésében rejlő potenciális gazdasági hasznok

The study approaches child protection involvement from an economic perspective, and is thus a niche study in the Hungarian literature. It seeks to quantify the social benefits to society of mitigating the negative impact of involvement in the provision of child protection, and the maximum return on investment in the child protection system for a given payback period and discount rate. As in international research, the evaluation of the project is based on a cost-benefit analysis of the increase in educational attainment. The social benefit is estimated by determining the number of people affected and the social benefit per person affected, and the social discount rate is determined using two types of elasticity estimates. The results suggest that a greater allocation of public resources to child protection provision not only benefits the individuals concerned, but can also result in a positive net present value investment for society as a whole.

Foreign bank branch participation and U.S. syndicated loan contract design

I examine whether and how foreign bank branch participation in U.S. loan syndicates influences loan contract design. I predict that foreign bank branches’ dollar funding liquidity risk and information frictions increase renegotiation costs and affect loan contract design. I find that loan contracts with greater foreign bank branch participation include fewer flexibility-reducing covenants, such as capital expenditure and balance sheet covenants, that restrict borrowers from making positive net present value investments. I document similar results using matched sample and plausibly exogenous variation in foreign bank branch participation. Additionally, loan contracts with greater foreign bank branch participation are more likely to feature split control rights, which give banks in revolving lines of credit the exclusive right to renegotiate. In contrast, foreign bank branches are more likely to be included in covenant-lite term loans. Overall, I show that foreign bank branch participation affects U.S. syndicated loan contract design through renegotiation costs.

Integrated management of urban and rural wastes with energy recovery and low carbon emissions

Waste management is a major challenge worldwide due to the increasing amount of waste generated, which requires sustainable treatment approaches. In this paper, a mathematical model for the optimal configuration of waste treatment processes is presented that considers municipal solid waste and cattle manure from feedlots. A mixed-integer quadratically constrained formulation is proposed to maximize the net present value of investments, and a multi-objective optimization method through ε-restriction is implemented to limit the global warming potential. The model aims to resolve the trade-off between centralized and decentralized networks. The location of the facilities, the ratio of urban to rural waste for each facility, and the waste streams to be transported are also determined by the model. The optimization approach has been evaluated in a real-world scenario in Argentina. For integrated treatment, the results show the potential of anaerobic co-digestion that justifies transporting co-substrates from remote areas. Decentralized designs show that anaerobic digestion is only convenient for large cities and feedlot production sites. Economic and environmental benefits are significantly higher for the integrated alternative. Under optimized conditions, electricity price should be as high as 55.2 USD per MWh to reach the breakeven point from an economic perspective, assuming no revenues from carbon credits.

Assessment of the wind energy potential and economic viability of selected sites along Nigeria’s coastal and offshore locations

Wind energy is a promising sector in the power generation industry because it is renewable and globally available. In this research work, the wind energy potential and the economic viability of using wind turbines to generate electricity in some selected sites along Nigeria’s coastline and offshore locations were evaluated. Using the statistical two-parameter Weibull probability density function method, wind speed data retrieved from an indigenous oceanography company and global information system (GIS) were analyzed for wind energy harvest. The energy output, unit cost of electricity generated by three commercially available wind turbine models (3 MW, 4 MW, and 6 MW), net present value (NPV), and payback period were evaluated. Levelized cost of electricity (LCOE) sensitivity to the discount rate, foundation cost, and turbine lifespan were also examined. The findings from the study showed that the offshore sites have four times greater wind power potential than the coastal sites. The offshore sites can be categorized as “class IIIb” wind sites, making the locations suitable for wind energy harvest. The techno-economic analysis showed that the net gains from investing in a 60-MW wind farm in the region can be as high as $62,000,000.00, while the project payback time can be as low as 5.74 years. Two of the offshore sites are recommended for the development of an offshore wind farm in the country because of their relatively low LCOE (0.04 $/kWh), higher NPV, and lower investment payback time. The Vesta-117 model wind turbine is the most suitable wind turbine system and recommended for use in the region because of its low cut-in speed (3 m/s). Sensitivity analysis showed that the LCOE of offshore-01 was reduced by 31% when the lifespan of the V117 turbine was increased from 20 to 25 years. The results also showed that reductions in the discount rate and foundation cost positively affect the LCOE.

ANALISIS STUDI KELAYAKAN PENGEMBANGAN USAHA JAMUR TIRAM PADA UD. KENANGA DI KELURAHAN AMPENAN SELATAN

The purpose of this study is to determine whether or not the business development that will be carried out by UD. Memories in the South Ampenan Village of Mataram City when viewed from the investment criteria of Net Present Value (NPV), Pay Back Period (PP) and Profitability Index (IP). The data collection method used in this study is the case method or case study. In this case the case under study is the plan to add one unit of mushroom house (Kumbung) with a capacity of 500 baglogs. To find out the extent to which a business or business will be planned and can provide benefits or benefits, the analysis used is analysis of investment criteria. Based on the calculation of the Net Present Value, it shows that the total present value is Rp. 66,009,488.33, - which is greater than the initial investment of Rp. 12,630,000.00. So it shows a positive (+) net present value of IDR 53,379,488.33. The business development plan by adding one kumbung unit is feasible when viewed from the NPV investment criteria because the NPV results are positive (+). From the results of the payback period (PP) calculation above, it can be stated that cash inflow is needed in year 1 to cover the remaining the initial investment is Rp. 3,279,776.8 then the need for Rp. 3,279,776.8 only describes 38% of cash inflow in year 2 (3,279,776.8 : 8,598,866.0) X 1 year or in other words that cash inflow of IDR 3,279,776.8 in year 2 will be collected within 4 months 17 days. So the initial payback period from the investment plan is shorter than the economic life that has been set, which is 10 years, so that the plan to add 1 unit of kumbung is feasible. Based on the calculation of the profitability index above, it is obtained 5.2, this indicates that the plan to add 1 unit of kumbung is feasible because the PI value is > 1

PAID MATERNITY LEAVE AND FIRM VALUE

ABSTRACT Paid maternity leave is a voluntary corporate decision. Its Cost-Benefit Analysis is presented by Obonyo et al. (2021). “The benefit is to help retain competent employees, to increase corporate morale and to benefit employee and business operations. There is an obvious cost to employees taking off work with pay for delivering and caring for their newborns or newly adopted children. The question is whether investors consider the policy of paid maternity leave as a positive net present value investment for long-term shareholder wealth maximization or as an expense.” This study is the first research to examine the stock price reaction to the announcement that a firm will initiate paid maternity leave benefits. We use a list of companies collected by the Fairygodboss.com website (2019) with data for companies that offer paid maternity leave. Using an event study model, the Day 0 abnormal return is a highly statistically significant negative -.51%. In addition, all the CARs around the event date are statistically significantly negative. By contrast, regression results indicate that voluntary paid maternity leave programs that are longer in length have better results for firm value. Thus, the findings of this research indicate that longer the term of the paid maternity leave policy (more investment in employees), the more positively it impacts firm value. Keywords Maternity Leave; Event Study; Firm Value

Risk factors, uncertainty, and investment decision: evidence from mutual fund flows from India

Asset pricing theories provide an understanding of the risk factors that determine the price of assets. The identification of risk factors assists investors in seeking out profitable investment opportunities. The difficulty in observing how investors identify such opportunities and how they react to it has largely restricted the literature from determining the factors that matter to an investor. There is a paucity of empirical studies that give insight into the investment decision-making process of an investor. Some of the recent studies that seek to fill this gap have used mutual fund flows to infer which asset pricing model investors use. The fund flows are used as a measure of investors’ response for the identification of a positive net present value investment opportunity. These studies suggest that the Capital Asset Pricing Model (CAPM) is closest to the asset pricing model used by investors in the US market. Taking this literature forward, we enquire whether investors from Indian markets exhibit a similar pattern when making investment decisions. Using the fund flows to actively managed equity schemes, we have investigated the risk factors that matter for mutual fund investors in India for the period from April 2006 to December 2019. We use alternative performance measure and then evaluate the sensitivity of fund flows to each of the performance measures. Our results suggest that investors assess the performance of competing investment opportunities based on naïve measures. Further, though uncertainty has a negative impact on fund flow, the flow–performance relation is not sensitive to the level of uncertainty.

Bridging the gap between stock price and bottom-line accounting numbers

We develop a method for extracting “other information” from the articulation between bottom-line accounting numbers and stock prices. We posit that “other information” captures future earnings growth originating from conservative accounting recognition principles as demonstrated by Penman and Zhang (2020) and Penman and Zhu (2022), as well as nonzero net present value investment opportunities. Our findings confirm that “other information” is strongly associated with various proxies for expected future earnings growth and firm risk attributes. Furthermore, we show how a structural expected return model incorporating our “other information” estimate can predict out-of-sample future stock returns and generate sizeable long-short return spreads.

Fuzzy set-based approach for grid integration and operation of ultra-fast charging electric buses

This paper presents a fuzzy set-based approach, composed by multi-objective decision-making and energy management system methodologies, for the integration of an electric mobility system in the power distribution grid and its operation. At first, the proposed approach uses financial evaluation criteria to provide the minimum cost of implementing the system, reflecting the net present value of investments, expenses, and depreciation of assets. In the second stage, a fuzzy set-based energy management system provides the system operation considering the demand curves required by the vehicle, number of stops, and topographic conditions of the route. The paper results are validated by a case study of an electric bus system in Brazil, based on ultra-fast charging, with several alternatives and different electric mobility scenarios. The sizing of the storage system and the determination of the number and the location of the charging stations are defined, taking into account the impacts caused on the distribution grid and its power quality. The operating results confirm that the fuzzy set-based energy management system is able to provide flexibility and robustness for the hybrid energy storage system, ensuring a steady and efficient power control.

A Modified Ohlson (1995) Model and Its Applications

In this paper, I explore a modified Ohlson (1995) model, which incorporates future positive net present value (NPV) investments. I first utilize an approach to simultaneously estimate the parameters in the linear information dynamic alongside the cost of equity capital, then evaluate the model’s performance in equity valuation and return prediction. Contrary to the systematic undervaluation of the Ohlson (1995) model reported in prior literature, I find that there is no systematic undervaluation of stock prices by using the modified Ohlson (1995) model. The out-of-sample median valuation bias estimated with this new approach is only 3.3% compared with 34.8% achieved when carrying out the estimation using existing methods. I also find that using a time-varying cost of equity capital reduces valuation bias and improves valuation accuracy. Furthermore, the expected return estimates developed from the model generate a monotonic decile ranking of future realized stock returns.

KELAYAKAN INVESTASI KREMATORIUM SANTHA GRAHA TUNON DESA ADAT BEDHA KABUPATEN TABANAN

Ngaben ceremony is included in Pitra Yadnya ceremony. Pitra Yadnya is a sacred offering or sacrifice shown to the ancestors sincerely based on the payment of debts to parents or ancestors. The customary system that has not been able to be carried out to the maximum, especially the people who are busy working, the community uses pitra yadnya ceremony at the Crematorium. The establishment of crematorium in Bedha Traditional Village named Santha Graha Crematorium is accommodating crematorium place that does not exist in West Bali area. The purpose of this research is to find out the investment feasibility of Santha Graha Tunon Crematorium Desa Adat Bedha is feasible or not from the financial aspect. The data collection technique in this analysis is to visit the location of Santha Graha Crematorium in Bedha Traditional Village, meet with the Chief Manager of Santha Graha Desa Adat Bedha Crematorium and staff to obtain the necessary data such as cost capital, crematorium service rates, ambulance rates, banten (upakara) tariffs, operational costs, and maintenance costs. Investment feasibility analysis reviewed in the form of financial aspects with NPV, IRR, Net B/C and Payback Period analysis. In the research at The Crematorium Santha Graha Tunon Desa Adat Bedha obtained the results of net present value (NPV) investment criteria of Rp. 12,627,720,181.95 > 0, Internal Rate of Return (IRR) 51.66 % > 16.8 % Net B/C 5.97 > 1, Payback period (PBP) within 3 years 2 months < 15 years. Of the four methods of investment criteria in the Crematorium Santha Graha Tunon Desa Adat Bedha is declared very feasible to be implemented because all are already eligible.

Economic analysis and risk assessment of biomass gasification CHP systems of different sizes through Monte Carlo simulation

The deployment of bioenergy has turned into a severe issue associated with energy security and greenhouse gas reduction. The development of technologies in the renewable energy market depends on the profitability of their investment. However, the Net Present Value of new technologies’ investment is affected by technical and economic uncertainties. Hence, the probability assessment of a positive Net Present Value and identifying critical economic and technical parameters can inform investors and decision-makers about any investment risks. This study evaluates the overall uncertainty in the Net Present Value of investment in cogeneration plants composed of a gasifier fed with biomass and a bottoming Internal Combustion Engine fed by the gasification product gas. Monte Carlo simulation assesses the probability of a positive Net Present Value for three sizes of cogeneration plants.Regarding sizes, the chance of generating a positive Net Present Value ranges from 66% to 90%, while the larger plants have a higher chance. The sensitivity analysis findings show that above all, biomass cost and then the sale price of electricity and the quantity of gasification product gas are the most dominant parameters. Using an internally produced biomass waste resource and possible achievement of green energy certificates on energy produced would make the initiative successful.

Feasibility of zero-energy affordable housing

The United States needs comprehensive policymaking reforms that promote sustainable residential development. This study investigates the feasibility of statewide, zero-energy affordable housing by analyzing historical data on the climate, energy use, and solar system costs in the Commonwealth of Virginia. The hypothesis examined is the net present cost of implementation of rooftop residential solar systems to achieve zero-energy, multifamily buildings of the U.S. Low Income Housing Tax Credit (LIHTC) program is lower than the discounted present cost of energy of otherwise identical buildings that run without renewable energy generation systems. We propose a generalizable framework for analyzing the feasibility of achieving regionwide or statewide zero-energy affordable housing. To validate the framework, we employ a longitudinal sample of monthly energy use data from 2013 to 2016, obtained from 310 residential units of 15 LIHTC developments across Virginia. Based on statistical regression analysis, energy simulation, and simulation-based risk analysis, we find that the net present value of investments in zero-energy affordable housing can be positive with a low risk. The investment value varies often depending on the zero-energy building definition, weather characteristics, retail price of electricity, and incentive rate. The results suggest that many other southern states can accrue benefits from zero-energy affordable housing.

Short-term stochastic movements of electricity prices and long-term investments in power generating technologies

Modeling probability distributions for the long-term dynamics of electricity prices is of key importance to value long-term investments under uncertainty in the power sector, such as investments in new generating technologies. Starting from accurate modeling of the short-term behavior of electricity prices, we derive long-term stationary probability distributions. Then, investments in new baseload generating technologies, namely gas, coal and nuclear power, are discussed. In order to compute the stochastic Net Present Value of investments in new generating technologies, the revenues from selling electricity in power markets as well as the costs which come from buying fuels at uncertain market prices must be evaluated over very long time horizons, i.e., over the whole lifetime of the plants. Starting from accurate short-term stochastic models of fuel prices in addition to electricity prices, we provide long-run probability distributions which are used to compute revenues and costs incurring during the whole lifetime of the plants. Five sources of uncertainty are taken into account, namely electricity market prices, fossil fuel prices (natural gas and coal prices), nuclear fuel prices and hbox {CO}_{text{2 }} prices. Our evaluation model is calibrated on empirical data to account for both historical market prices and macroeconomic views about future trends of electricity and fuel prices. The full probability density of the stochastic Net Present Value is thus determined for each generation technology considered in this study.

Integrated distribution expansion planning considering stochastic renewable energy resources and electric vehicles

Renewable energy resources and transport electrification have become essential components of modern and future distribution planning. Despite the impetus of economic and environmental benefits, the uncertainty brought in poses challenges. In this paper, we propose an integrated expansion planning framework based on a multiobjective mixed-integer nonlinear program. The aim is to minimize the net present value of investments considering feeder routing, substation alterations and construction while maximizing the utilization of proposed charging stations. Distributed generation and load uncertainties, recast in two-stage stochastic programming, are tackled with a scenario generation and reduction technique using a probabilistic approach with Kantorovich metrics. The final number of the scenarios are validated with an alternative clustering method. A flow-based location–allocation theory with user equilibrium traffic assignment model is exploited to site charging stations. The sizing problem is determined using continuous-time Markov chain modeling. The proposed framework is solved with a multiobjective Tchebycheff decomposition-based evolutionary algorithm and tested on a modified 54 bus distribution network and 25 transportation node system. Numerical results demonstrate the capability of the proposed method. Distribution planning authorities can benefit from the presented approach to make intertemporal investment decisions while maintaining the quality of system performance.

A Real Options Approach to Valuate Solar Energy Investment with Public Authority Incentives: The Italian Case

Solar energy investment represents currently a valid reason to support sustainable economic development. In fact, over the last few years, governments have applied different measures to incentivize private consumers and firms to use renewable energies. Photovoltaic (PV) projects are characterized by uncertainty due to meteorological conditions, the unpredictable behavior of government, and managerial flexibility. Since the Net Present Value (NPV) approach is not able to capture these uncertain factors, it was replaced with the Real Options Approach (ROA). The latter method manages to embed flexibility in PV investment using binomial trees. This paper valuates PV investment in all regional areas in Italy using an integrated approach between the discounted cash flows method and real option value, called Expanded Net Present Value (ENPV). We fit the probability of tax benefits into a binomial lattice model after analyzing the geographical position and weather conditions of all regional capitals of Italy. The results show that the cities with high irradiance/temperature have positive NPV and high investment values. On the other hand, while most cities have negative NPV, the inclusion of the flexibility in investment decisions gives additional value to the project, making the ENPV positive and implying an attractive investment opportunity with the possibility of delaying the project. We also propose a sensitivity analysis that shows how the real option value changes when incentive policies of the government become more attractive. This paper contributes to the existing literature in the way of considering financial, meteorological/geographical, and political factors to valuate PV investment.

Studies on environmental parameters, energy requirement and techno-economics of capsicum grown under greenhouse

An experiment was conducted during winter season in a semi-cylindrical greenhouse of size 4m x 25m for cultivation of capsicum at Bhubaneswar in coastal Odisha, India. Greenhouse was effective in raising the temperature during cold night period inside the greenhouse thereby creating a better microclimate for production of higher yield and quality fruits than open field cultivation. The growth and yield of capsicum was better under greenhouse than open field cultivation. The yield of capsicum per sq. m. inside the greenhouse was 2.17 times more over open field condition. The study indicates that the input energy per unit of capsicum produce is 3.38 MJ/kg under open field condition and 4.1 MJ/kg under greenhouse cultivation. The higher energy requirement for greenhouse cultivation is mainly due to the framed structure and the glazing materials used in the greenhouse. The assessment of input energy establishes the priorities for input energy optimization. The greenhouse was evaluated in terms of its techno-economic analysis, which was carried out by using different economic indicators such as Net Present Value, Benefit Cost Ratio, Internal Rate of Return and Pay Back Period and compared with open field cultivation. The net present value of investment made on greenhouse for cultivation of capsicum was Rs.119110 as compared to Rs.43239 when grown in the open field. The benefit cost ratio for greenhouse was 2.61 and 2.58 for open field cultivation. The internal rate of return for greenhouse was 40 and 35 per cent for open field cultivation. The pay back period for capsicum under greenhouse was 4 years. It was observed that, techno-economically; cultivation of capsicum in winter under greenhouse will be acceptable by the farmers of Odisha.

Tax Deductibility of Interest under the ATAD in Investment Decisions

In 2019, the Czech Republic implemented some of the provisions under Council Directive (EU) 2016/1164, also called the ATAD (Anti-Tax Avoidance Directive). Since then, professionals in the field have been following the impact of this directive on tax legislation and accounting. However, this paper aims to show that in addition to the tax rates and the profit after tax, the ATAD will also impact financial management, specifically investment decision-making. The paper analyses a model situation based on the implementation of these regulatory measures and focuses on the effects of the new EU legislation on the interest tax shield and the overall borrowing costs. The methodology used in the paper is described in more detail in section 2 (“research commentary”) and is based on comparing the net present value of an investment financed with debt capital before and after the ATAD implementation. The calculations use the accounting data of an existing company including information that is not available to the public. This example is used to demonstrate the point by calculating the net present value with regard to the impact of the interest tax shield based on the method of financing. The calculations in the paper follow the applicable rules used in the Czech Republic before and after the ATAD came into force. The results confirm that the net present value (NPV) of investments have decreased. Due to the default parameters set for the calculation, the results also show a comparable decrease in the NPV when the investment is financed with debt capital. With comparable conditions and initial parameters (i.e. zero down payment and identical borrowing costs), the decrease in the NPV is higher when the investment is financed with a bank loan. The analysis shows that investment planning under the new legislation will be more complex and will have to take into account the financial results of the whole firm and whether the borrowing costs are tax deductible. All in all, this analysis suggests that economic calculations have to focus more on the details and the wider context of the tax deductibility of interest.

Does It Pay to Play? A Multi-Perspective on Follow-On Funding, Funding Structure and Investment Profitability in a Venture Capital Context

Within this paper, I propose a comprehensive modelling framework to evaluate venture capital (VC) investment decisions from an individual investors' portfolio perspective. The approach integrates the perspective of different shareholding parties and allocation of rights usually determined via shares in each one's portfolio. Using a basic model implementation of the modelling framework, I focus on the feasibility of follow-on funding of investment projects given underlying investment profitability. In particular, I evaluate the minimum levels of profitability of the investment, where funding is feasible. Based on the model, I propose alternative explanations on observed phenomena in VC such as underinvestment (non funding of positive net present value investments) and funding of negative net present value projects which are ultimately rooted in common practice of venture funding structure. In a first model extension, I also consider the effectiveness of pay-to-play rights on the minimum levels of profitability. Based on the model's result, I conclude that pay-to-play rights effectiveness is eventually limited by the investment approval of shareholders.

Analisis Dampak Ekonomi Pelaksanaan Jalan Simpang Rukis - Tanjung Kemuning Provinsi Bengkulu

Public transportation is transportation that is needed by most urban communities, a city cannot survive without public transportation. The main objective of this study is to determine the reduction of road user costs and financial analysis of NPV (Net Present Value) and BCR (Benefit Cost Ratio). The research method used is descriptive which is used to analyze the impact of time and cost savings, the method used is a descriptive statistical method, NPV and BCR Financial Impact Testing and investment feasibility sensitivity analysis. The results showed the cost efficiency of road users was Rp. 600,001.24 and increase travel speed to 50 km / hour. Vehicle Operating Costs (BOK) consist of fixed costs and operational cost components. Efficiency of expansion of vehicle operations to Rp. 1,921,187. From the financial analysis the implementation path of Simpang Rukis - Tanjung Kemuning is economically feasible. This is the result of a performance with NPV of Rp. 1,921,187, -> 0 and BCR 1.18> 1. Sensitivity analysis is shown when costs increase by 15%, NPV is Rp. 1,921,187 and BCR decreased to 1.03. When the benefits decrease by 15%, the NPV drops to Rp. 1,306,921,187 and BCR up to 1,004. When costs increase by 15% and benefits decrease by 15%, the NPV drops to Rp. 1,306,921,187 and BCR to 0.87 and the road is economically unfeasible. Conclusion, with the construction and maintenance of roads and bridges at Simpang Rukis - Tanjung Kemuning, it is hoped that the pace of transportation is efficient and economical so that it can accelerate the economy of Bengkulu province, especially the people of Simpang Rukis - Tanjung Kemuning.
 Keywords: Economic Feasibility, NPV, BCR, Sensitivity Analysis