Investment and Profitability Calculation

Peter Zweifel, Aaron Praktiknjo and Georg Erdmann
Additional contact information
Aaron Praktiknjo: RWTH Aachen University
Georg Erdmann: Berlin University of Technology

Chapter 3 in Energy Economics, 2017, pp 37-63 from Springer

Abstract: Abstract Capital budgeting and profitability accounting are necessary for assessing the economic viability of energy investments. Although the methodology for energy investments does not differ fundamentally from other applications, there are unique problems associated with it due to some particularities of investment in energy technologies. Long planning, construction, and operation periods make the result of an investment decision strongly dependent on the discounting of future cash flows. These facts motivate consideration of the following issues: What is the meaning of (net) present value of a flow of revenues (expenditures, respectively)? Why is the interest rate especially important in investment projects relating to energy and what determines this rate of interest? How can one account for future inflation (deflation, respectively)? Would it be preferable to abstain from discounting altogether, in the interest of sustainability? What insights can be gleaned from recent developments in the theory of finance?

Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:sptchp:978-3-662-53022-1_3

Ordering information: This item can be ordered from
http://www.springer.com/9783662530221

DOI: 10.1007/978-3-662-53022-1_3

Access Statistics for this chapter

More chapters in Springer Texts in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().