The rationale for using heuristics to establish a risk premium that is added to the risk-free rate to obtain the value of an investment is questioned and an alternative method, termed decoupled net present value (DNPV), is proposed. Rather than using utility theory concepts to decrease the value of uncertain cash flows, the risks associated with project cash flows are discretely quantified usin...

We examine the valuation of projects in a setting where an investor can invest in a portfolio of private projects as well as in securities in financial markets, but where exact replication of project cash flows in financial markets is not necessarily possible. We consider both single-period and multi-period models, and develop an inverse optimization procedure for valuing projects in this setti...

We propose theoretical improvement to the Silva & Santiago (2009) valuation model for innovative projects and discuss a practical application. We discuss some points of the model and include a minimum sales function, which decreases in time. In order to test the model, we performed the valuation of an existing project. This project has multiple sources of uncertainty and managerial flexibility ...

Monetary valuation of environmental change is useful if one aims to rank alternative projects according to some specific social welfare function. However, if the project analysis is intended as background information to a democratic debate, the advantages of monetary valuation are less obvious. This paper analyzes aggregation of information, taking normative disagreement explicitly into account...

This document describes ongoingwork to be performed on a research project during the period 16 September 2002 through 15 September 2003. In subsequent sections we provide background information for the project taken from the research proposal and present some ideas that were sent recently in a progress report to the providers of the research funds. The goals of this research project are: (1) to...