Fuzzy interval net present value

Marco Corazza () and Silvio Giove ()
Additional contact information
Silvio Giove: Department of Applied Mathematics, University of Venice

No 170, Working Papers from Department of Applied Mathematics, Università Ca' Foscari Venezia

Abstract: In this paper we conjugate the operative usability of the net present value with the capability of the fuzzy and the interval approaches to manage uncertainty. Our fuzzy interval net present value can be interpreted, besides the usual present value of an investment project, as the present value of a contract in which the buyer lets the counterpart the possibility to release goods/services for money amounts that can vary, at time instants that can also vary. The buyer can reduce the widths of these variations by paying a cost. So, it is "natural" to represent the good/service money amounts and the time instants by means of triangular fuzzy numbers, and the cost of the buyer as a strictly increasing function of the level a in [0, 1] associated to the generic cut of the fuzzy interval net present value. As usual, the buyer is characterized by a utility function, depending on a and on the cost, that he/she has to maximize. As far the interest rates regard, we assume that the economic operators are only able to specify a variability range for each of the considered period interest rate. So, we represent the interest rates by means of interval numbers. Besides proposing our model, we formulate and solve the programming problems which have to be coped with to determine the extremals of the cut of the fuzzy interval net present value, and we deal with some questions related to the utility function of the buyer.

Keywords: net present value; fuzzy set theory; interval number theory; alpha-cut; utility function (search for similar items in EconPapers)
JEL-codes: C61 G19 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2008-11
References: Add references at CitEc
Citations:

Downloads: (external link)
http://virgo.unive.it/wpideas/storage/2008wp170.pdf First version, 2008 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to virgo.unive.it:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

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:vnm:wpaper:170

Access Statistics for this paper

More papers in Working Papers from Department of Applied Mathematics, Università Ca' Foscari Venezia Contact information at EDIRC.
Bibliographic data for series maintained by Daria Arkhipova ().