AI SearchAdjusted present value-at-risk (APV-at-Risk) method in project investment evaluation
Call Number: AIT Thesis no.ST-01-31 Material type:
SeriesSeries: Asian Institute of Technology. Thesis ; no. ST-01-31Publication details: Bangkok : Asian Institute of Technology, 2001Description: 83 leavesSubject(s): Online resources: Dissertation note: Thesis (M.Eng.) - Asian Institute of Technology, 2001 Summary: Construction-related project appraisal methods are under rigorous scrutiny after the 1997 Asian financial crisis. Conventional Discounted-cash-flow (DCF) methodology (either NPV or IRR) was perceived as the correct capital budgeting tool before the financial crisis. But the particular version of DCF that has been accepted as the standard - using the weighted-average cost of capital (WACC) - is now obsolete. Today's better alternative, adjusted present value (APV), is especially versatile, reliable and transparent. APV's power lies in the managerially relevant information it provides (all financing side-effects). It can analyze not only how much a project is worth but also where the value comes from. In light of its superiority, it is possible to develop a new project appraisal method that incorporates financial, political and market risks - APV-at-Risk - by synthesizing APV and dual risk-return methods. It is shown in this research that APV-at-Risk is the method of choice among others, and can provide more prudent and transparent project appraisal decisions.
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A thesis submitted in partial fulfilment of the requirements for the degree of Master of Engineering, School of Civil Engineering
Thesis (M.Eng.) - Asian Institute of Technology, 2001
Construction-related project appraisal methods are under rigorous scrutiny after the 1997 Asian financial crisis. Conventional Discounted-cash-flow (DCF) methodology (either NPV or IRR) was perceived as the correct capital budgeting tool before the financial crisis. But the particular version of DCF that has been accepted as the standard - using the weighted-average cost of capital (WACC) - is now obsolete. Today's better alternative, adjusted present value (APV), is especially versatile, reliable and transparent. APV's power lies in the managerially relevant information it provides (all financing side-effects). It can analyze not only how much a project is worth but also where the value comes from. In light of its superiority, it is possible to develop a new project appraisal method that incorporates financial, political and market risks - APV-at-Risk - by synthesizing APV and dual risk-return methods. It is shown in this research that APV-at-Risk is the method of choice among others, and can provide more prudent and transparent project appraisal decisions.
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