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Two phase parametric and probabilistic NPV calculations, with possible deferral of disposal of UK nuclear waste as an example

Two phase parametric and probabilistic NPV calculations, with possible deferral of disposal of UK nuclear waste as an example
Two phase parametric and probabilistic NPV calculations, with possible deferral of disposal of UK nuclear waste as an example
This paper illustrates the value of several particular features of a first phase parametric approach to discounted cash flow (DCF) decision analysis when significant uncertainty is involved. It also illustrates the value of second phase probabilistic approaches to selected parameters for five quite different example reasons. The most controversial example reason concerns the discount rate. The particular example used to illustrate both phases may stimulate general interest because of the important issues involved, but it is argued that the two phase approach as a whole has a wide range of applications for decisions large and small.
capital budgeting, risk analysis, parametric analysis
0305-0483
707-714
Chapman, Chris B.
a4f4805b-b67d-4c4c-856b-78e01a2c89a0
Howden, Mike
8cdc10a5-4e91-4923-96f3-b6c41e16c230
Chapman, Chris B.
a4f4805b-b67d-4c4c-856b-78e01a2c89a0
Howden, Mike
8cdc10a5-4e91-4923-96f3-b6c41e16c230

Chapman, Chris B. and Howden, Mike (1997) Two phase parametric and probabilistic NPV calculations, with possible deferral of disposal of UK nuclear waste as an example. OMEGA - The International Journal of Management Science, 25 (6), 707-714. (doi:10.1016/S0305-0483(97)00026-1).

Record type: Article

Abstract

This paper illustrates the value of several particular features of a first phase parametric approach to discounted cash flow (DCF) decision analysis when significant uncertainty is involved. It also illustrates the value of second phase probabilistic approaches to selected parameters for five quite different example reasons. The most controversial example reason concerns the discount rate. The particular example used to illustrate both phases may stimulate general interest because of the important issues involved, but it is argued that the two phase approach as a whole has a wide range of applications for decisions large and small.

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Published date: 1997
Keywords: capital budgeting, risk analysis, parametric analysis
Organisations: Management

Identifiers

Local EPrints ID: 35680
URI: http://eprints.soton.ac.uk/id/eprint/35680
ISSN: 0305-0483
PURE UUID: 0bfc9dc2-820d-41d2-93b9-8fdd8e4f8207

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Date deposited: 01 Aug 2006
Last modified: 15 Mar 2024 07:53

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Author: Mike Howden

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