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Erreurs méthodologiques dans l’évaluation des projets d’investissement

Marcel Boyer ()

Revue française d'économie, 2018, vol. XXXIII, issue 4, 49-80

Abstract: Despite recent developments and lessons in investment project evaluation, analytical errors persist, representing as many approaches that do not conform to best practice. In this article, we present five of these errors, all sources of bias in the valuation of investments : Using the government’s cost of financing as the cost of capital (discount rate) in the valuation of public investments rather than an approach incorporating the cost of risk transferred and borne by taxpayers ; Using the company’s weighted average cost of capital (WACC) to evaluate all investments rather than differentiated rates based on project risk levels and profiles ; Using Net Present Value (NPV), with a single discount rate, of a project’s cash flows when the project depends on multiple sources of systematic risk rather than an optimized NPV approach (NPV-O) ; Using the NPV when the project manager can modify, accelerate, slow down, or even postpone or abandon the project in progress rather than a Real Options Valuation (ROV) approach ; Using the legal identity of partners in public-private partnership projects rather than the nature of the risks actually shared and supported by each. Although these errors are more relevant in some cases in the public sector and in other cases in the private sector, they are found in numerous investment decisions in both sectors. They can cause significant losses of value for private and public firms and organizations.

Date: 2018
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