Models and Indicators for Risk Valuation of Direct Investments

Economic Computation and Economic Cybernetics Studies and Research, Vol. 43, Issue 3, 2009, p. 69-75

7 Pages Posted: 20 Dec 2012

See all articles by Victor Dragota

Victor Dragota

Bucharest University of Economic Studies

Ingrid-Mihaela Dragota

Bucharest University of Economic Studies

Date Written: September 1, 2009

Abstract

Abstract. Classical techniques for the valuation of direct investments projects take risk into account only incidentally. In these models, the risk is taken into account by the discount rate: higher is the risk, higher is the discount rate. As long as the discount rate is right estimated, indicators – Net Present Value (NPV), payback period, profitability index, etc. – will be relevant. Modern techniques eliminate some of the inconveniences. The purpose of this study is to make a comparative analysis between the results obtained based on classical techniques and modern techniques of valuation.

Keywords: Direct Investments, Net Present Value, Traditional techniques, Monte Carlo Technique, NPV frequency distribution

JEL Classification: G31

Suggested Citation

Dragota, Victor and Dragota, Ingrid-Mihaela, Models and Indicators for Risk Valuation of Direct Investments (September 1, 2009). Economic Computation and Economic Cybernetics Studies and Research, Vol. 43, Issue 3, 2009, p. 69-75, Available at SSRN: https://ssrn.com/abstract=2191721

Victor Dragota (Contact Author)

Bucharest University of Economic Studies ( email )

Piața Romană 6
Bucharest, 010374
Romania

Ingrid-Mihaela Dragota

Bucharest University of Economic Studies ( email )

5-7 Mihail Moxa Street
Bucharest
Romania

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
90
Abstract Views
557
Rank
513,029
PlumX Metrics