Real Investment Projects Research Articles

Attraction of Investment in Agriculture of Kazakhstan

Characteristic for conditions competition increase in the market of the investments, interfaced to world financial crisis, makes superrigid deman ds to investment decisions. In similar conditions the exit on the capital markets is one of the key advantages, providing to the enterprises their further development. Attraction of investments is interfaced to a number of difficulties. In connection with shortage of own means for financing of investment activity of the organizations by the basic source of financing there was an extra financing. Necessity of considerable volume of financial resources on development of investment projects does their attraction by a paramount problem of the enterprises-borrowers. Availability of credit sources of financing is limited both because of the high price of the extra capital, and owing to inability of the enterprises-borrowers to interest potential creditors in realization of investment projects. It causes necessity of an economic justification of efficiency and appeal of investment investments. Only having defined, what concrete parameters the company should possess, and having developed concrete ways and indicators of achievement of these parameters, it is possible in modern conditions effectively to develop business. Such aspiration creates investment appeal and is realized by means of basic tools considered in given work.

Another way to understand the real options value for engineers

This paper is concerned with explaining real options values (ROV) using an opportunity cost concept. Through exploring the opportunity costs embedded in the ROV, we hope that the following presentation will be helpful for engineers to understand the meaning of the terminologies relevant to the ROV. With this belief, we performed the work under which the real investment project was delayed by 1 year only. The three different opportunity costs were explored in this work for the purpose of the paper as follows: an interest earning opportunity, an opportunity loss, and an expected opportunity gain. A short numerical example was demonstrated to show that the real options value derived with the three opportunity costs was equivalent to the value done with the binomial lattice model proposed by Cox, Ross, and Rubinstein.

An Evaluation Model for Deferred Project Development in Real Estate Investment

In order to secure a higher return on investment, real estate developer s often choose to adopt a deferred development strategy after acquiring land. However, this strategy involves a high degree of complexity and uncertainty. On this basis, this study develops a model to assess the value of deferred development projects. At any stage in the project, the model can inform a strategic choice to proceed with development, abandon the project, or defer development. At the same time, the model can be used to make a realistic assessment of the project value and the degree of risk involved. Based on the particular characteristics of deferred development in real estate investment projects, the model draws on theory on the waiting option and the abandonment option. Geometric Brownian Motion (GBM) is used to model the interdependent volatility in value associated with proceeding with development and abandoning the project, and It ¯ o's lemma is applied to deduce stochastic volatility. The model can hence calc ulate the expected utility and rate of success of deferred development. Finally, case study analysis demonstrates that this model is an effective tool for evaluation of deferred development projects. It therefore provides a useful reference f or real estate developers when making strategic decisions.

Valuing water quality improvement in China: A case study of Lake Puzhehei in Yunnan Province

Even though surface water has been polluted almost everywhere in China, few economic valuation studies have been conducted to value water quality changes. This paper reports an economic valuation study conducted in Yunnan, China, which estimates the total value of a real investment project to improve the water quality of Lake Puzhehei by one grade level. Located in Qiubei County far from big cities, the lake has been experiencing rapid water quality deterioration in past several years. Based on the multiple bounded discrete choice approach, an average household in Qiubei County is estimated to be willing to pay 30 yuan per month continuously for 5years for the water quality improvement by one grade level, roughly equivalent to 3% of the average household income. The elasticity of willingness-to-pay with respect to income is estimated to be 0.21. The economic rate of return of the proposed project is estimated to be 18%, indicating an economically favorable investment in water quality improvement. This study also demonstrates that the previous knowledge about the water quality changes and about the project can have significant positive impacts on people's willingness to pay, whereas the interviewer effect on valuation can be negative.

Providing investment attractiveness of renewal and development of fixed assets in the energy sector

The purpose of research is a comparative analysis of economic mechanisms for the realization of investment projects for new construction and modernization power generation capacity in the energy sector and their effect on private investment. In this connection, planned and actual volumes of generating capacity, particular features of the industry, causing investment attractiveness are discussed. The necessity of using, and a comparison of primary economic mechanisms in order to guarantee the return of investments in the new construction and modernization of power generation capacity is shown. The method of calculating the tariff under the agreement of supply power capacity is analyzed. The study proved that the presence of an effective working mechanism of return on investment is a key element influencing the investment in new construction and modernization of power generation capacity. Also, it is shown that with the end of using agreement of supply power capacity, industry will face a significant reduction in investment. In this connection, it is recommended to speed up the formation of long-term capacity market, which involves the application of new investment incentives in the industry. The research results can be applied by investment banks, and other stakeholders as a methodological apparatus assessing investment and whether to participate in their financing.

An Estimation of Profitability of Investment Projects in The Oil and Gas Industry Using Real Options Theory / Ocena Opłacalności Projektów Inwestycyjnych W Przemyśle Naftowym Z Wykorzystaniem Teorii Opcji Realnych

Abstract Paper discusses issues relating to the valuation of investment efficiency in the oil and gas industry using a real options theory. The example of investment pricing using real options was depicted and it was confronted with the analysis executed with the use of traditional methods. Indicators commonly used to evaluate profitability of investment projects, based on a discounted cash flow method, have a few significant drawbacks, the most meaningful of which is staticity which means that any changes resulting from a decision process during the time of investment cannot be taken into consideration. In accordance with a methodology that is currently used, investment projects are analysed in a way that all the key decisions are made at the beginning and are irreversible. This approach assumes, that all the cash flows are specified and does not let the fact that during the time of investment there may appear new information, which could change its original form. What is also not analysed is the possibility of readjustment, due to staff managment’s decisions, to the current market conditions, by expanding, speeding up/slowing down, abandoning or changing an outline of the undertaking. In result, traditional methods of investment projects valuation may lead to taking wrong decisions, e.g. giving up an owned exploitation licence or untimely liquidation of boreholes, which seem to be unprofitable. Due to all the above-mentioned there appears the necessity of finding some other methods which would let one make real and adequate estimations about investments in a petroleum industry especially when it comes to unconventional resources extraction. One of the methods which has been recently getting more and more approval in a world petroleum economics, is a real options pricing method. A real option is a right (but not an obligation) to make a decision connected with an investment in a specified time or time interval. According to the method a static model of pricing using DCF is no longer used; an investment project is divided into a series of steps and after each one there is a range of possible investment decisions, technical and organizational issues and all the others called ‘real options’. This lets one take many different varieties of modyfiying a strategy while pricing the project. This also makes it possible to react to the changing inner and outer situation and introducing new information while accomplishing the investment project. Owing to those, the decision process is a continuous operation, what is an actual vision of a real investment project management in the petroleum industry.

Research on MIS Design for Real Estate Company

Real estate investment and construction projects have the characteristics of large-scale, long life cycle, technical complexity, multi-units involvement, difficult to organize and implement, and the projects are usually located in wide range. Therefore, it’s necessary to construct the corresponding project management information system to manage the real estate project timely and accurately, to provide managers sufficient information and decision supports. This paper analyzes the process of real estate construction projects and the projects’ information system needs. Based on the analysis, the real estate construction project management information system functions framework and principles of implementation are discussed. Providing real estate development and construction companies with information management supporting tools.

Fuzzy Real Option Evaluation of Real Estate Project Based on Risk Analysis

The initial investment decision-making of the real estate project is very important. It requires making the right assessment of engineering project risk, then judging the project potential value which is affected by the risk factors. Within this context, fuzzy mathematics is used to assess the levels of income risk and cost risk in the real estate investment, and then adjust the relevant parameters of fuzzy real option based on the above risk assessment of real estate project, which will improve the rationality and validity of the engineering potential value evaluation. Finally, this paper illustrates the assessment model with an example of a real estate investment project in Hangzhou.

Promoting Innovation: The Law of Publicly Traded Corporations

Improving economic welfare requires that societys scarce savings be allocated among proposed real investment projects in a way that appreciates the prospects of promising new innovations. Corporate and securities law help structure important elements of this process of allocation. This article sketches out an approach based upon a seemingly paradoxical analogy of a market economys overall finance process to the way a hierarchical organization gathers and processes relevant bits of information dispersed among many individuals in order to make decisions. It thereby takes advantage of important thinking in communications and organizational theory about how to make organizations sensitive to the potentialities of new information and ideas.The analysis suggests that established firms should pay out a relatively high portion of their cash flows. There should be a substantial venture capital sector and an active market for IPOs. Primary and secondary market prices should be relatively accurate. Incumbent managers of established firms should be judged in part by the medium term share price performance of their firms and poor performers should be under threat of replacement.A comparison of four moments in economic historythe United States in the 1970s and 1980s, Japan since 1995, continental Europe since the 1995, and the United States since the 1995supports these conclusions. The United States since 1995, relative to the other three moments in economic history, has had the least capital deepening and the fastest rate of growth in productivity per hour worked. It has also had, relative to the other three moments, a finance system most closely resembling what is called for here.Achieving such a system requires rigorous, effectively enforced securities disclosure and anti-fraud laws. Corporate law must leave poorly performing incumbent management vulnerable to removal by hostile tender offer, or shareholder or independent board vote. Share price based compensation must be legally practical. And there must be serious constraints on non-pro-rata distribution among shareholders of the wealth created by the firm.

An assessment of the forms of social effect when implementing investment projects

Mechanisms generating various forms of social effects arising from the realization of investment projects are considered in the paper. A formalized procedure is suggested for assessing a project’s aggregate social efficiency.

Il Risk Management nei progetti di investimento attraverso la Multi Criteria Decision Analysis

Usually, we consider Multi Criteria Decision Analysis (MCDA) as a deterministic approach to support complex decisions, which involve multidisciplinary profiles. Furthermore, risk analysis is considered as an integral part of investments analysis, also in a probabilistic version. In this work, we are going to explore the applicability of probabilistic MCDA in supporting risk analysis practices (as a part of project management activities), in economic feasibility evaluation of the real estate investment projects. It is assumed a management approach based on adaptive approach instead of optimization approach; to operate in context characterized by the presence of risk/uncertainty components; that these components are able to perturb decision processes and strategic choices, conditioned by subjectivity/uncertainty of stakeholders and institutions in judgement definition phase (decision maker’s utility functions, criterion scores, ranking of alternatives, etc.).

Tourism Investments under Uncertainty: An Economic Analysis of ‘Eco-Monsters’

‘Ecological monsters’ can be the legal outcome of rational choices made by three players: a firm, a policymaker and Nature. The firm asks the local policymaker for permission to undertake a real investment project in a stochastic framework, with real options and environmental externalities. The model consists of a non-cooperative game and its solution implies a bizarre outcome, both for the firm when it interrupts and abandons the investment project and for the policymaker when it is unable to avoid eco-monsters. Policy implications and partisan effects are explored.

Beta Estimation with Stock Return Outliers: The Case of U.S. Pharmaceutical Companies

Efficient estimation of the equity cost of public corporations is an essential component of computing the required rate of return of real investment projects, and therefore the basis for a rational investment policy. The accepted methodology relies on the CAPM model to define the return risk premium, and the OLS method to estimate the beta risk coefficient required for calculating the premium. This study challenges the use of the OLS method for this task by demonstrating its vulnerability to the impact of stock return outliers caused by large, unpredictable, company-specific events. That impact is verified on a sample of U.S. pharmaceutical companies by comparing the OLS estimation performance with that of our proposed method based on Huber’s Robust M (HRM) estimator, a related statistical method that follows a mixed return model identifying regular and outlier return components. Using the HRM-estimated beta as a benchmark, we demonstrate that (1) outliers can substantially bias the OLS beta, (2) the bias is negatively correlated with company size, and (3) the size of the bias is often moderated but not eliminated by extending the estimation period. The latter finding suggests that a robust method like HRM is preferable where estimators ought to represent the behavior of the majority of historical data despite the presence of outliers. The risk of trusting the OLS beta is especially high when estimation must rely on a small sample.

Looking at the Value of an One-Step Deferral Option Through the Opportunity Cost Concept

This paper is concerned with exploring the components of the opportunity costs embedded in a deferral options value. It is believed that various kinds of the opportunity cost exist in the deferral options value. With this belief, we performed the work with the assumptions postulated for the general binomial lattice model developed by Cox, Ross, and Rubinstein (CRR model). Under which the real investment project is delayed by one year only for the pedagogical purpose. The three different opportunity costs embedded in the real options value (ROV) were identified: an interest earning opportunity, an opportunity loss, and an expected opportunity gain. With these opportunity costs considered together with other components like the net present value (NPV), we will present the opportunity cost model for one-year deferral option value. A short numerical example is presented to demonstrate that the opportunity cost model provides the same value as with the CRR model. Sensitivity analysis to each of the components made up of the strategic net present value (SNPV) is performed with respect to the risk-free interest rate. As a result of the sensitivity analysis, the interesting fact was found that the ROV increased up to some risk-free interest rate and thereafter it decreased. We explain in more detail the several more interesting facts in the section of the sensitivity analysis.

Insuring a risky investment project

In the standard model for insurance demand, the risk is totally exogenous and the insurance premium is paid for out of riskless wealth. This model yields results that are mostly in contradiction to everyday observation and have been used to question the pertinence of expected utility theory on which the model is based. For some years now, several papers have made attempts to provide foundations for a theory of insurance demand that leads to less provocative comparative statics results. In these papers, the risk for which coverage is sought becomes endogenous, and the decision to purchase insurance is made simultaneously with the decision on how much to invest in insurable assets. All these papers use a standard financial investment framework. This paper offers a contribution to this literature by using a slightly different framework: the case of a firm exposed to an insurable risk affecting return on a real investment project. The model is kept simple by using a two-state environment. It yields results that are both more complete and more general than results in previous work with the same motivation.

Real estate value: creation and destruction

Purpose – A central consideration in real estate is the analysis of those factors that impact upon value, in particular how value is created in real estate development and investment deals. The converse of understanding how real estate value may be destroyed is equally important. The paper seeks to argue that a better understanding of these processes would allow more informed and successful decisions to be made in structuring investments and evaluating performance.Design/methodology/approach – An innovative web‐based survey tool was employed. The paper analyses expert opinion based on a sample of 97 real estate professionals from North America and Europe. Those issues that can impact on the creation and destruction of value in real estate development and investment projects and their relative magnitude of impact are assessed.Findings – There is no apparent distinction between those factors that create value and those that destroy value, though there are variations in the magnitude of impact. Idea/concept ...

Insuring a Risky Investment Project

In the standard model for insurance demand, the risk is totally exogenous and the insurance premium is paid for out of riskless wealth. This model yields results that are mostly in contradiction to everyday observation and have been used to question the pertinence of expected utility theory on which the model is based. For some years now, several papers have made attempts to provide foundations for a theory of insurance demand leading to less provocative comparative statics results. In these papers, the risk for which coverage is sought becomes endogenous and the decision to purchase insurance is made simultaneously with the decision how much to invest in insurable assets. All these papers use a standard financial investment framework. This paper offers a contribution to this literature by using a slightly different framework: the case of a firm exposed to an insurable risk affecting return on a real investment project. The model is kept simple by using a two-state environment. It yields results that are both more complete and more general than results in previous work with the same motivation.

Fujian qiaoxiang diaocha: qiaoxiang rentong, qiaoxiang wangluo yu qiaoxiang wenhua (review)

Reviewed by: Fujian qiaoxiang diaocha: qiaoxiang rentong, qiaoxiang wangluo yu qiaoxiang wenhua (Identities, Networks and Culture: Fieldwork Reports on the Homeland of Overseas Chinese in Fujian) James K. Chin Fujian qiaoxiang diaocha: qiaoxiang rentong, qiaoxiang wangluo yu qiaoxiang wenhua (Identities, Networks and Culture: Fieldwork Reports on the Homeland of Overseas Chinese in Fujian). Edited by Li Minghuan. Xiamen: Xiamen University Press, 2005. 374 pp. A spate of policy and academic studies on qiaoxiang, or homeland of Chinese Overseas, have come into view in China over the past decade, heralding a new trend — the study of Chinese Overseas. Of these, the volume edited by Li Minghuan is the latest and a welcome addition to the scholarship in the field. Unlike previous undertakings, this work is a product of collaboration among scholars from three universities in Fujian Province in South China. A careful reading of the contents pages will reveal that the editor has taken great pains in structuring the book chapters by six authors from four different disciplinary backgrounds, each presenting his/her research findings based on fieldwork conducted at different locales of Fujian qiaoxiang. As indicated by the book title, the editor has skillfully conceptualized their studies in binding the six chapters together under the theme of identities, networks and culture in qiaoxiang. The book is divided into two sections comprising six main chapters and two chapters of introduction and conclusion. While the first section examines three typical qiaoxiang villages and one farm based on case studies, the second section attempts to explore in-depth the social transformation and dynamics of emigration waves in Fujian's qiaoxiang from different theoretical perspectives. The first chapter authored by Liu Chaohui is a particularly interesting study of Xin'an Village, a traditional qiaoxiang village near today's Xiamen (Amoy). Using a cultural, anthropological approach, it studies two lineage temples established by the same Qiu (Khoo) clan in southern Fujian and Penang of Malaysia, and analyzes the relations and interactions between a Chinese community overseas and its ancestral village over the past one and a half centuries. The author vividly shows how qiaoxiang ties can be maintained in an institutionalized way by Hokkiens overseas. What is especially notable is a case study of an unsuccessful real estate investment project initiated by clansmen of the ancestral village in 2000. It convincingly shows that qiaoxiang ties and clan connections sometimes do not necessarily lead to FDI (foreign direct investment) from ethnic Chinese communities overseas even as regular overseas remittances and donations are expected. Economic benefit is usually given priority when Chinese Overseas invest in the Chinese mainland. Unfortunately, while a fairly large part of the chapter is devoted to the description and discussion of the Khoo community in Penang, almost all the discussion on Penang's ethnic Chinese community has been drawn [End Page 289] from the works of a local historian, Teoh Shiaw Kuan, as the author himself has never visited Penang. In addition, it seems he is not familiar with the scholarship on the history of the Chinese in British Malaya, judging from his discussion of the Chinese kongsi in Penang. Unlike the first chapter which is a study of a traditional Chinese qiaoxiang village, a newly emerged qiaoxiang village is purposely chosen for discussion by the editor in the second chapter to present a totally different pattern of emigration from present day China. Zhan Guanqun mines government documents, statistics and personal interviews for a richly detailed account of the formation and development of a new qiaoxiang village in mountainous northern Fujian. The author probes into the current emigration mechanism of rural China with Sha'xi Village as an example and points out that the new emigration waves from China are mainly facilitated by two factors — immigrant network and non-governmental credit system. The editor who was also involved in the fieldwork, emphasizes that the phenomenon of migration in qiaoxiang villages which have mushroomed in South China actually represents a new type of transnational labor movement operating in a non-governmental context and targeting labor markets of developed countries. As she stresses in the introductory chapter, scholars of Chinese migration should view her hypothesis as a basic premise when observing and analyzing current transnational...

Asymmetric Taxation and Cross-Border Investment Decisions

This paper analyzes the impact of particular loss offset limitations on intrastate and crossborder investment decisions. Investment can be realized in the investor's domestic business, in a foreign branch or in a foreign subsidiary. The relative impact on the optimal real investment alternative compared to the optimal financial investment alternative indicates the investment incentives of tax law asymmetries. Integrating an initial loss carryforward at the time of investment creates a special decision situation. Varying loss offset parameters typically induces ambiguous effects that depend on the combination of all parameters under consideration. On average, a domestic minimum tax and a time limit on loss carryforwards tend to depress real investment. However, it is possible to find counter-examples. Real investment projects with decreasing cash flows and expected infra-marginal projects are less likely to be discriminated against than projects with increasing cash flows and expected marginal projects, respectively. An initial loss carryforward generates a domestic lock-in effect that may be intensified by loss offset limitations. Depending on the parameter setting, the opposite - a push-out effect - may occur as well.