A MODEL FOR OPTIMAL INVESTMENT PROJECT CHOICE USING FUZZY PROBABILITY

Joan Carles Ferrer-Comalat (), Salvador Linares-Mustaros () and Dolors Corominas-Coll ()
Additional contact information
Joan Carles Ferrer-Comalat: Department of Business Administration, University of Girona, Spain
Salvador Linares-Mustaros: Department of Business Administration, University of Girona, Spain
Dolors Corominas-Coll: Department of Business Administration, University of Girona, Spain

ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, 2016, vol. 50, issue 4, 187-203

Abstract: In this paper we present a model for classifying exclusive investments. The model uses Bellman and Zadeh’s decision-making criterion, determining the degree of convergence when the objective is to maximize the net present value of the project under the constraint of minimizing risk. The original aspect of this work consists in incorporating uncertainty into the model by considering variables such as project life, net income and capitalization rate as uncertain in order to determine net present value and risk. The concept of a fuzzy event is used to calculate the net present value and assess the risk of each investment project. This allows us to establish the degree to which a project is a good investment, understanding this as a fuzzy event and establishing the degree to which a project has a high net present value, understood as another fuzzy event.

Keywords: fuzzy logic; fuzzy set theory; decision-making; fuzzy arithmetic; probability of a fuzzy event; investment. (search for similar items in EconPapers)
JEL-codes: C02 C51 C61 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
ftp://www.eadr.ro/RePEc/cys/ecocyb_pdf/ecocyb4_2016p187-203.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cys:ecocyb:v:50:y:2016:i:4:p:187-203

Access Statistics for this article

ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH is currently edited by Gheorghe RUXANDA

More articles in ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH from Faculty of Economic Cybernetics, Statistics and Informatics Contact information at EDIRC.
Bibliographic data for series maintained by Corina Saman ().