Stochastic Dominance, Dynamic Programming and Bayes Filtering: Applications in NPV and NPVaR
Journal Title: Asian Journal of Economics, Business and Accounting - Year 2017, Vol 2, Issue 1
Abstract
Applications of three computational methods in the evaluation of NPV and NPV at risk (NPVaR) of a project are studied. These methods are stochastic dominance, dynamic programming and Bayes filtering. First, the definition of NPVaR is related to the stochastic dominance as a maximization problem, then the dynamic programming method is used to solve the maximization in the presence of an investor belief parameter. To enter this parameter to the problem, the Bayes filter method is applied. Literatures is reviewed about these three methods. The sensitivity analysis of the results to the different utility functions as well as to the continuous compounding methods are also studied. A real data set is presented. Finally, a conclusion section is also given.
Authors and Affiliations
Reza Habibi
Keywords
Related Articles
- EP ID EP338506
- DOI 10.9734/AJEBA/2017/29173
- Views 119
- Downloads 0
Accountability and Transparency Hurdles of Post Democratic Regime in Nigeria: Economic Implications
With increasing activities of separatists and agitators for self independence taking a heavy toll on the sovereignty of Nigeria, more curiosity has once again been drawn to the accountability strength, transparency quali...
The Relationship between Exports and Inflation in Kenya: An Aggregated Econometric Analysis
Aim: This paper tries to identify the relationship between exports and inflation in Kenya: An aggregated econometric analysis. Study Design: The analysis is based on the demand pull theory of inflation and on applied cor...
Career Planning Strategies and Skills of Ho Polytechnic Students, Ghana
This study seeks to examine how important career planning is to students, to determine sources of information use in making future career decisions, determine career planning activities being employed by students and to...
Small Firms’ Strategy Adoption and Business Outcomes in Business Games: An Empirical Investigation from Nigeria
The study aimed at determining the effect of adopted competitive strategy on the outcomes of SMEs in Nigeria. The sample size of the study comprised of 1231 owner-managers from selected Small and Medium scale Enterprises...
Customers and Employees Assessment of Corporate Branding Benefits
Corporate branding has become an important tool employed by many industries in recent decades. It is described as the subliminal process by which industries use marketing strategies to attract customers to easily remembe...