Using the Net Present Value Rule to Make Value-Creating Investment Decisions

DOI

10.2991/cmfe-15.2015.153How to use a DOI?

Keywords

net present value; investment decisions; capital investment process; capital budgeting; objective optimization

Abstract

At present, most of the researches on net present value are focused on single objective cases. This paper discusses net present value problem with upper level multi-objective optimization. In order to solve the problem efficiently, we present a genetic algorithm using interpolation. According to the NPV rule, if the investment has a positive (negative) NPV it creates (destroys) value and should be undertaken (rejected) .The NPV rule is a good investment decision rule because it adjusts the investment's expected cash flows for both their timing and risk and has the convenient property of being additive. Most important is the capacity of the NPV method to evaluate the value-creating potential of an investment proposal. In addition, the NPV of an investment proposal is an estimate of the current value the proposal will create or destroy if undertaken.

Copyright

© 2015, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Hui Xu
PY  - 2015/07
DA  - 2015/07
TI  - Using the Net Present Value Rule to Make Value-Creating Investment Decisions
BT  - Proceedings of the International Conference on Chemical, Material and Food Engineering
PB  - Atlantis Press
SP  - 649
EP  - 652
SN  - 2352-5401
UR  - https://doi.org/10.2991/cmfe-15.2015.153
DO  - 10.2991/cmfe-15.2015.153
ID  - Xu2015/07
ER  -