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Tourism currently contributes significantly to the national economy. When investing in the accommodation facility on the real-estate market, the tourism sector also represents a certain risk due to a high level of seasonality. This paper investigates the risks related to prices, income and occupancy of accommodation facilities for selected regions in Slovakia. The value of accommodation facilities is estimated using discounted cash flow, probabilistic distribution of rental prices and occupancy of accommodation facilities in selected Slovak regions. The results provide information for potential and profitable investments in exposed regions in tourism. The information can be used in the field of risk management to avoid or reduce the risk of risk investments. Although the resulting values were calculated only for some selected regions, the proposed procedure can be used for any region and compared with the current values. [ABSTRACT FROM AUTHOR]

A techno-economic analysis (TEA) was conducted to evaluate the economic profitability and feasibility for a H 2 energy storage system using an alkaline and a polymer electrolyte membrane water electrolysis for 1 MW water electrolysis operation. Many economic analysis methods such as itemized cost estimation, profitability analysis using a cumulative cash flow diagram, and uncertainty analysis employing a Monte-Carlo simulation method were utilized to perform a TEA. In particular, a renewable energy certificate (REC) was considered as an additional benefit of a renewable energy use. From itemized cost estimation, respective levelized costs of H 2 of 7.21 and 9.19 $ kgH 2 −1 were obtained for both H 2 energy storage systems in an alkaline and a polymer electrolyte membrane water electrolysis by considering current economy situation and therefore it is still difficult to be cost-competitive compared to a commercial H 2 production cost. From profitability and uncertainty analysis results, an appropriate REC weight was confirmed in terms of discounted profitability criteria like a discounted payback period, a net present value, a present value ratio, and a discounted cash flow rate of return. In addition, a REC weight was affected on a net present value compared to a REC trading cost fluctuation. • Techno-economic analysis was conducted for a H 2 energy storage system. • Respective LCOHs of 7.21 and 9.19 $ kgH 2 −1 were obtained for HESSs in an AWE and a PWE. • An appropriate REC weight was identified based on discounted profitability criteria. • A REC weight has more impact on a NPV than a REC trading price fluctuation. [ABSTRACT FROM AUTHOR]

The circular economy is calling for the rapid use of already-developed renewable energies. However, the successful implementation of those new fuels is limited by economic and political issues. For instance, in the Brandenburg region, Germany, biogas production from anaerobic digestion of biomass and wastes is a current alternative. However, the upgrading biogas to biomethane is still challenging and the economic viability is unknown. Therefore, we performed an economic analysis for biogas upgrading to biomethane in the Brandenburg region. Five biogas plant sizes were analyzed by the method of discounted cash flow. This method yields the net present value of the projects, thus revealing the profitability or non-profitability of the plants. Results indicate profitable outputs for medium and large plants, with net present values between 415 and 7009 k€. However, the smallest plants have net present values from -4250 to -3389 k€, thus needing further economic efforts or subsidies to reach profitability. Indeed, biomethane prices should range between 52.1 and 95.6 €/MWh to make these projects profitable. Combinations of 50% of investment subsidized and 11.5 €/MWh feed-in tariffs subsidies could make the projects reach profitability. These findings reveal that political actions such as green policies and subsidies are needed to implement green energy. This case study should serve as a potential tool for policy-makers toward a sustainable bioeconomy. [ABSTRACT FROM AUTHOR]

Purpose: The primary purpose of this paper is to develop the translation formula between the required return on unlevered and levered equity for the specific case where cash flows have a finite lifetime and the flow to debt is prespecified. The secondary purpose of this paper is to underpin the importance of the type of stochasticity of cash flows for translation formulas. A general derivation of such formulas and the discount rate in the free cash flow approach is shown. Design/methodology/approach: The paper starts with the same assumptions that have been applied by Modigliani and Miller (1963), Miles and Ezzell (1980) and other researchers. Then the paper develops the mathematical foundations to apply a deterministic backward-iterative scheme for valuing cash flows. After stating the valuation formulas for levered and unlevered equity, debt and tax shields, the authors mathematically derive the relationship between the unlevered return and levered return on equity. Findings: Conventional translation formulas apply to very special cases. They can generally not be used for projects with nonconstant leverage and a finite lifetime. In general, translation formulas depend on continuing values, cash flows, leverage, taxation, risk-free rate, etc. In this paper, the translation depends on the structure of the debt in addition to the well-known parameters in conventional formulas. This paper formula contains the Modigliani-Miller translation formula as a special case. Originality/value: The authors develop a novel formula for the translation of the required return on unlevered to levered equity. With this formula, the authors offer a solution for the consistent valuation of cash flows with a limited lifetime and given debt financing. [ABSTRACT FROM AUTHOR]

Liming is a common management practice, but there exists uncertainty about the economic benefits. An economic analysis of the costs and profitability of liming arable crops was undertaken using data from the long‐term liming experiment at Rothamsted and Woburn. There was a strong liming effect on gross margins, but large differences in the economic benefit between crops. For some crops (such as spring barley), liming greatly improved the gross margin, while for spring oats liming provided very little increase. Most economic benefit was achieved with the high lime treatment, but the cumulative discounted cash flow indicated that it took approximately 20 years before a distinct difference developed between the lime treatments. Therefore, lime should be considered a capital investment and economic evaluation undertaken over a long period. Liming rate increased the net present value expressed as an annual equivalent (NPVa). An additional £436 ha−1 year−1 at Rothamsted and £208 ha−1 year−1 at Woburn of profit was gained from the adoption of the most profitable liming treatments over not liming. Sensitivity analysis indicated that total liming costs had a weak effect on NPVa, but crop price had a strong effect. The economic performance of liming differed between sites and was higher at Rothamsted than at Woburn, mostly because of soil differences. Liming greatly improves economic returns of most arable crops, but the magnitude of the long‐term economic benefit depends upon the sequence of crops within a given rotation. [ABSTRACT FROM AUTHOR]

The present article seeks to critically rethink the key issue of how compensation and damages are and should be calculated in the context of investor-State arbitration – the 'quantum' question, as is commonly referred to in arbitral practice. We will make three main claims: first that such calculations are premised on a fundamental consensus that presents the work of arbitrators in this area as essentially uncontroversial fact-finding operations and has led to an inflation of awards, second that this consensus is in reality built on a series of myths and unjustifiable assumptions, and third that the realization that this is so should lay the ground for more acceptable calculations. [ABSTRACT FROM AUTHOR]

The article discusses ISO/Final Draft International Standard (FDIS) 10014 Quality management systems Managing an organization for quality results Guidance for realizing financial and economic benefits defines "financial benefit" as an organizational improvement expressed in monetary form. Topics include evaluating metrics for financial and economic impact starts with top management; and the standard provides an entire annex of examples of financial and economic metrics.

Investments in renewable energy resources have become inevitable due to increasing energy demand and energy prices, diminishing non-renewable energy resources, and the outgrowth of carbon footprints. Photovoltaic (PV) systems offer high solar energy potential in sustainable energy production whereas their high initial costs necessitate critical strategic valuation of investments. Valuation with conventional methods has been challenging due to existence of uncertainties such as fluctuating PV panel prices, changing meteorological conditions with certain effects on power generation, and governmental policies on energy market regulations. This study aims to propose a real options approach to valuation of residential rooftop PV system investments considering these uncertainties and demonstrate benefits of this approach with an application on the residential PV investment decisions in Turkey. The proposed method, Real Options Valuation (ROV) with Least-Squares Monte Carlo Simulation (LSMC) considers the deferral option of the investor by utilizing stochastic simulations, the discounted cash flow method, linear regression, and backward dynamic programming and thus evaluates the effects of uncertainties on financial attractiveness of residential PV investments. The case study findings proved that ROV with LSMC having a 7-years deferral option supported the investment decision with realizable cost-effective options while "NPV method" resulted in an infeasible investment. Scenario analysis was also conducted to explore policy options that can be used to promote solar energy investments in Turkey. This study has a potential to have practical contributions for investors as well as implications for policy-makers. [Display omitted] • Considering strategic value of flexibility for investment time with deferral option. • Handling uncertainties using stochastic simulations. • ROV method can prevent faulty rejection of investments with classical methods. [ABSTRACT FROM AUTHOR]

El objetivo del presente artículo se centra en resumir en forma exhaustiva y concisa las diferentes metodologías de estimación de la volatilidad que se han propuesto para el enfoque de opciones reales (real options approach o ROA) y brindar, además, una explicación teórica y práctica para estimar una volatilidad no sesgada e incondicional para dicha metodología. Los resultados de la investigación sugieren que la utilización de los métodos actuales genera una marcada sobreestimación de la volatilidad, lo que se transmite en última instancia en la sobrevaloración de la opción real. De esta forma se apropia el uso del método de estimación insesgado para determinar su impacto en la toma de decisiones para un proyecto real del sector de petróleo y gas en Colombia, en el que se estimó su valor estratégico por medio del uso de las opciones reales y se comparó con el resultado estático obtenido por el método de flujos de caja descontados (discounted cash flow o DCF); como resultado se encontró que se genera un valor adicional no percibido por la metodología tradicional que está acorde con la respectiva volatilidad que generó el commodity. Se propone que para futuras investigaciones se mantenga la condición de insesgamiento pero que la estimación sea condicional a través de modelos econométricos, con el fin de emular las irregularidades y las características empíricas que se presentan en las series financieras mediante la utilización, por ejemplo, un apropiado sistema de ecuaciones diferenciales estocásticas, como condición necesaria para el comportamiento del precio y de la volatilidad del activo subyacente. || The aim of this paper is to summarize exhaustively and concisely, the different methodologies for estimating the volatility that has been proposed for the real options approach (ROA), and also provide a theoretical and practical explanation for estimating an unbiased volatility and unconditional for this methodology. The results of the research suggest that the use of the current methods generates a marked overestimation of the volatility, which is ultimately transmitted in the overvaluation of the real option. In this way, the application of the unbiased estimation method is used to determine its impact on decision-making for a real project in the oil and gas sector in Colombia, in which its strategic value was estimated through the use of real options, and it was compared with the static result obtained by the method of discounted cash flows (DCF); as a result it was found that, it is generated an additional value not perceived by the traditional methodology, that is consistent with the respective volatility that was generated by the commodity. It is proposed that for future research, unbiasedness condition is maintained, but that the estimate is conditional through econometric models, in order to emulate the irregularities and empirical characteristics presented in the financial series using, for example, an appropriate system of stochastic differential equations, as required condition for the performance of price, and the volatility of the underlying asset.

The article presents the results of research carried out in the framework of a comparative analysis of the most common, effective approaches and methods for assessing oil and gas companies. The conclusions about the need for a set of methods for evaluating mergers and acquisitions. The leading role in the article is given to the method of discounted cash flows, which allows to get the real value of oil and gas company, to take into account synergies and possible risks to the author developed the methodology for calculating the weighted average cost of capital as the discount rate

Objective: Magazine Luiza, founded in November 1957, a national retail icon, started in 2011 at B3, with exponential growth in the valuation of its shares. This case provides the following pedagogical objectives: a) to promote the problem analysis, to propose and inquire decisions regarding valuation; b) stimulate reflection between the theory that supports the evaluation purposes and the way it should be developed and applied; c) expand the ability to relate the valuation theoretical assumptions of valuation and their adequacy to reality. Methodology: The Financial Statements were extracted from the MGL company website, on Economática® and on B3 website. Professor Damodaran's database was also used. We highlight the data are real, however, on the other hand, the existence of Alpha Varejo and its proposed acquisition of Magazine Luiza is considered as a hypothetical situation. Results: From a behavioral point of view, it allows students and professors to have fair and discussions so that there is mutual respect for divergent opinions and ideas, allowing the exposure of their points of view. Estimating the company's value using the Discounted Cash Flow and Relative Valuation methods is a complex task and can be considered as an important decision-making process, especially for the company's shareholder. In the use of methods, there is the need to choose appropriate premises that best reflect the reality of the company. Study Contributions: The performance of the proposed activity, with undergraduate or graduate students in the business area in disciplines aimed to analyze the financial viability of companies and valuation, contributes to the training of these students with critical analysis development and stimulating discussion in ??finance area.

In recent years, On-orbit servicing (OOS) is in the ascendant, attracting attentions of a growing number of institutions and commercial space companies. The sustainable development of OOS is heavily relied on its economic benefits. However, the economic feasibility of OOS is not sufficiently analyzed in the existing studies. Based on this, a general economic value analysis framework for OOS is proposed in this paper. Firstly, the maximum price that clients would be willing to pay is obtained by real option method through comparing values of OOS by an alternative scheme. Secondly, the minimum price that the servicer could afford is predicted by Discounted Cash Flow (DCF) method, which is based on a service provider value model. Six necessary factors are considered in this model at the same time, including servicing architecture and its initial construction cost, mission related depreciation, income tax, operating expense, monetary value, as well as technical risks and the corresponding insurance premium. Then, the above two prices are compared to analyze the economic feasibility of OOS. Finally, mission cost, pricing strategies and OOS value drivers are modeled and discussed within the estimated acceptable price range. The results show that the OOS is commercially viable when the initial costs of geosynchronous communication satellites and the servicing architecture are more than $242 M and less than $140 M respectively. The applicability and usefulness of the proposed method are demonstrated by an actual business case analysis of the Mission Extension Vehicle-1 (MEV-1). • An economic value analysis framework for on-orbit servicing (OOS) is proposed. • A modified cost model for service provider is established. • It discusses acceptable service charging, value-based pricing strategy and key driving factors of OOS. • The satellite servicing for GEO satellites is a promising industry. • Appropriate value sharing between clients and service providers is essential for sustainable development of OOS. [ABSTRACT FROM AUTHOR]

• A PPA business model is assessed under the Colombian renewable energies law. • PV investments are feasible when tax benefits are considered into the model. • ROA shows that is better to delay the investment under current market conditions. • Low execution of PV projects under Law 1715 is explained in the ROA approach. Renewable energies are an alternative to explore new business models in Colombia, especially when the new regulation associated with Law 1715 is considered. In this work the financial feasibility of a power purchase agreement (PPA) that uses photovoltaic energy is analyzed from the perspective of a non-traditional investor. In this paper, the financial feasibility of a PPA business was analyzed considering some of the benefits offered by Law 1715 through the use of discounted cash flows and real option analysis. The results show that tax benefits (included on Law 1715) improve the feasibility of this business models in Colombia, nevertheless, the defer option value suggest the convenience of delaying the investment. This work contributes to the analysis of the effect of the renewable energy policy incentives and the development of new business models based on renewable energies and the analysis of decisions that help include photovoltaic energy in Colombia. [ABSTRACT FROM AUTHOR]

In any context where a discounted cash flow valuation is required, there is the issue of estimating the continuing value. The most common way to do that is to assume that by the terminal horizon the company is in a steady state and is growing at a constant rate. The issue is how to handle inflation. The problem is that it is often done wrong and the impact is typically material. Because there remains significant confusion, in this paper we simplify the analysis by isolating the two key issues and providing example calculations. We show that even at the current 2% level proper treatment of inflation has a sizeable impact on valuation. If inflation were to accelerate as a result of current monetary and fiscal policies, the significance of this issue will increase. [ABSTRACT FROM AUTHOR]

Featured Application: The proposed model of stage settlements with milestones payments may be useful in practical projects and be beneficial both for the client and for the contractor. Its application may reduce delays in the completion of project stages, which is a significant problem in information technology (IT) or industry projects. This article presents the resource-constrained project scheduling problem with the discounted cash flow maximization criterion from the perspective of a contractor. Cash flows are considered as the contractor's expenses related to the execution of activities and client's payments (revenue to the contractor) after the completion of contractual stages. To solve the problem, dedicated techniques to generate solutions and a simulated annealing algorithm are proposed. Finally, the proposed procedures are examined using the test library, Project Scheduling Library (PSPLIB). An experimental analysis identified the efficient moves and techniques for creating solutions, that is backward scheduling with optimization of completion times of project stages and triple justification. [ABSTRACT FROM AUTHOR]

Context: The large inter-annual and decadal rainfall variability that occurs in northern Australian rangelands poses major challenges for the profitable and sustainable management of grazing businesses. Aims: An integrated bio-economic modelling framework (GRASP integrated with Breedcow and Dynama (BCD)) was developed to assess the effect of alternative grazing-management options on the profitability and sustainability of a beef cattle enterprise in the central-western Mitchell grasslands of Queensland over a multi-decadal time period. Methods: Four grazing-management strategies were simulated over a 36-year period (1982–2017) in the GRASP pasture-growth model, using historic climate records for Longreach in central-western Queensland. Simulated annual stocking rates and steer liveweight-gain predictions from GRASP were integrated with published functions for mortality and conception rates in beef-breeding cattle in northern Australia, and then used to develop dynamic BCD cattle-herd models and discounted cash-flow budgets over the last 30 years of the period (1988–2017), following a 6-year model-equilibration period. The grazing-management strategies differed in the extent to which stocking rates were adjusted each year, from a common starting point in Year 1, in response to changes in the amount of forage available at the end of the summer growing season (May). They ranged from a low flexibility of 'Safe stocking rate' (SSR) and 'Retain core herd' (RCH) strategies, to a moderate flexibility of 'Drought responsive' (DR), to a 'Fully flexible' (FF) strategy. The RCH strategy included the following two herd-management scenarios: (1) 'Retain herd structure', where a mix of cattle were sold in response to low pasture availability, and (2) 'Retain core breeders', where steers were sold before reducing the breeder herd. Herd-management scenarios within the DR and FF strategies examined five and four options respectively, to rebuild cattle numbers and utilise available pasture following herd reductions made in response to drought. Key results: Property-level investment returns expressed as the internal rate of return (IRR) were poor for SSR (–0.09%) and the three other strategies when the herd was rebuilt following drought through natural increase alone (RCH, –0.27%; DR, –1.57%; and FF, –4.44%). However, positive IRR were achieved when the DR herd was rebuilt through purchasing a mix of cattle (1.70%), purchasing pregnant cows (1.45%), trading steers (0.50%) or accepting cattle on agistment (0.19%). A positive IRR of 0.70% was also achieved for the FF property when purchasing a mix of cattle to rebuild numbers. However, negative returns were obtained when either trading steers (–2.60%) or agistment (–0.11%) scenarios were applied to the FF property. Strategies that were either inflexible or highly flexible increased the risk of financial losses and business failure. Property-level pasture condition (expressed as the percentage of perennial grasses; %P) was initially 69%P and was maintained under the DR strategy (68%P; average of final 5 years). The SSR strategy increased pasture condition by 25% to 86%P, while the RCH and FF strategies decreased pasture condition by 29% (49%P) and 65% (24%P) respectively. Conclusions: In a highly variable and unpredictable climate, managing stocking rates with a moderate degree of flexibility in response to pasture availability (DR) was the most profitable approach and also maintained pasture condition. However, it was essential to economic viability that the property was re-stocked as soon as possible, in line with pasture availability, once good seasonal conditions returned. Implications: This bio-economic modelling analysis refines current grazing-management recommendations by providing insights into both the economic and sustainability consequences of stocking-rate flexibility in response to fluctuating pasture supply. Caution should be exercised in recommending either overly conservative safe stocking strategies that are inflexible, or overly flexible stocking strategies, due to the increased risk of very poor outcomes. The large inter-annual and decadal rainfall variability, which occurs in northern Australian rangelands, poses major challenges for the profitable and sustainable management of grazing businesses. A bio-economic evaluation found that when stocking rates were based on conservative carrying-capacity principles designed to maintain pasture condition, a moderate flexibility in response to pasture availability was likely to be the most profitable approach to grazing management, as well as maintaining pasture condition over time. [ABSTRACT FROM AUTHOR]

This paper defines the roles of biomethane for a double-green transition, through the integration of an effective management of renewable energy and municipal waste. The authors perform an assessment of the potential transition of the municipality of Rome to a more sustainable transport system, based on the economic feasibility of production of biomethane as analysed with the Discounted Cash Flow methodology. The potential reduction of emissions is quantified considering biomethane, to be used as vehicle fuel instead of natural gas. The provision of subsidies is found to be an essential condition to support the development of the biomethane sector. The subsidies must be coordinated with other policies such as the construction and operation of new fuelling stations and the increase of vehicles fuelled by biomethane. Several economic indicators are used to support investors by defining the conditions in which the profitability and economic opportunities are quantified. The transformation of bio-wastes into clean energy, closes the loop and helps societies to make progress toward becoming circular economies, which can contribute to decarbonizing the transport sector. Results of these analyses are applicable in other municipalities, which are currently under-utilizing their organic wastes and by-products. Image 1 • Biomethane supports the development of CE models. • Biomethane can contribute to a double green transition.. • A total NPV varies from 4.6 million € to 63.3 million €. • Do Nothing cost varies from 365 thousand € to 2872 thousand €. • The decrease of GHG emissions ranges from 43 to 51 thousand ton CO2eq/year. [ABSTRACT FROM AUTHOR]

This research focuses on valuing an investment project through the Theory of Real Options Games (ROG), this approach allows extending the standard valuation analysis including flexibility and uncertainty scenarios in market structures such as monopoly and oligopoly, given the importance of making decision in investment projects, there is a need to identify strategies with tools to overcome the limitations of traditional methods based on the discounted cash flow model (DCF), analysing the impact that may exist on investment when incorporating the actions of other market participants. [ABSTRACT FROM AUTHOR]

Objective: Magazine Luiza, founded in November 1957, a national retail icon, started in 2011 at B3, with exponential growth in the valuation of its shares. This case provides the following pedagogical objectives: a) to promote the problem analysis, to propose and inquire decisions regarding valuation; b) stimulate reflection between the theory that supports the evaluation purposes and the way it should be developed and applied; c) expand the ability to relate the valuation theoretical assumptions of valuation and their adequacy to reality. Methodology: The Financial Statements were extracted from the MGL company website, on Economática® and on B3 website. Professor Damodaran's database was also used. We highlight the data are real, however, on the other hand, the existence of Alpha Varejo and its proposed acquisition of Magazine Luiza is considered as a hypothetical situation. Results: From a behavioral point of view, it allows students and professors to have fair and discussions so that there is mutual respect for divergent opinions and ideas, allowing the exposure of their points of view. Estimating the company's value using the Discounted Cash Flow and Relative Valuation methods is a complex task and can be considered as an important decisionmaking process, especially for the company's shareholder. In the use of methods, there is the need to choose appropriate premises that best reflect the reality of the company. Study Contributions: The performance of the proposed activity, with undergraduate or graduate students in the business area in disciplines aimed to analyze the financial viability of companies and valuation, contributes to the training of these students with critical analysis development and stimulating discussion in finance area. [ABSTRACT FROM AUTHOR]

Purpose: Magazine Luiza, founded in November 1957, is a national retail icon, went public in 2011 at B3, with exponential growth in the valuation of its shares. This case provides the following pedagogical objectives: a) promote problem analysis, propose and inquire about valuation decisions; b) stimulate reflection between the theory that supports the purposes of evaluation and the way it should be developed and applied; c) expand the ability to relate the theoretical assumptions of valuation and their adequacy to reality. Methodology: The Financial Statements were extracted from the website of the company, on Economática® and on the website of B3. Professor Damodaran's database was also used. It should be noted that the data are real, however, on the other hand, the existence of the company Alpha Varejo and its proposed acquisition of the company Magazine Luiza are considered as a hypothetical situation. Results: From a behavioral perspective, it allows students and teachers to have healthy dialogues and discussions so that there is mutual respect for divergent opinions and ideas, allowing the exposure of their points of view. Estimating the value of the company using the Discounted Cash Flow and Relative Valuation methods is a complex task, and can be considered as an important decision-making process, especially for the company's shareholder. In the use of methods, there is the need to choose appropriate premises that best reflect the reality of the company. Contributions of the Study: The performance of the proposed activity, with undergraduate or graduate students in the business area in disciplines aimed at analyzing the financial viability of companies and valuation, contributes to the training of these students with the development of critical analysis and stimulating discussion in the financial studies. [ABSTRACT FROM AUTHOR]

Objectives To characterize the supply chain of vanilla (Vanilla planifolia Andrew) in order to detect areas which could be improved and to determine the economic viability of its production. Design/Methodology/Approach The information was compiled through semi-structured interviews in a vanilla company. The Value Stream Mapping technique was used to describe the supply chain. Additional databases were consulted in order to obtain information on the production and commercialization of vanilla. The economic viability of vanilla production was analyzed with IRR. Results This case study had five phases in its supply chain. The IRR of cash flow in the traditional and technological production systems were positive, although the IRR of the traditional system was greater even though it had lower production volumes. Study Limitations/Implications It was observed that vanilla requires between 3 and 4 years for its first harvest, independently of the production system, traditional or technological, which means that there are negative cash flow numbers during the first two years in both systems, despite a positive IRR. Findings/Conclusions The critical stage in the supply chain of the company studied was the production. The cash flow for the technological system was superior when compared to the traditional system. However, the IRR for the technological system was lower, since the investment in shade cloth was not compensated by the discounted cash flows that could otherwise be obtained. [ABSTRACT FROM AUTHOR]

B Monday 7 June 2021 b The Moderator (Mr K. Jennings, F.I.A.): Hello everyone and welcome to our session today, "Long-term stochastic risk models: the sixth generation of modern actuarial models?" This is going to include things like lapse risk, expense risk, GAO take-up risk, morbidity risk, and so on. The following example is about lapse risk, but it could equally well be applied to some of the other risks, maybe expense risk or GAO risk. For operational risk, I think most internal model firms will have operational risk modelled using scenario workshops, looking at various operational risk events and what they cost. Here in the risk-based capital assessment, for the first time, we are looking at the capital requirements for all our risks individually and then bringing them together with an aggregation approach to get real-world capital requirements. [Extracted from the article]

In this paper, we investigate the risks of cash flow news and discount rate news exposed to durable consumption. When utility is nonseparable in nondurable and durable consumption, the optimal portfolio allocation implies a linear factor model in nondurable and durable consumption growth. Using 30 portfolios sorted by book-to-market, momentum and size, we find that the differences in these betas account for more than 70% of the cross-sectional variation in the risk premia. [ABSTRACT FROM AUTHOR]

Copyright of Human Resource Management / Zarzadzanie Zasobami Ludzkimi is the property of Institute of Labour & Social / Instytut Pracy i Spraw Socjalnych and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Sinapsis: Revista de Investigaciones de la Escuela de Administración y Mercadotecnia del Quindío EAM is the property of Escuela de Administracion y Mercadotecnia del Quindio and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Under International Financial Reporting Standards, managers can use two approaches to increase the estimated fair value of goodwill in order to justify not recognizing impairment: (1) make overly optimistic valuation assumptions, and (2) increase future cash flow forecasts by inflating current cash flows. Because enforcement constrains the use of optimistic valuation assumptions, we hypothesize that enforcement influences the relative use of these two choices. We test this hypothesis by comparing a sample of 1,958 firms from 36 countries that are likely to delay recognizing goodwill impairment (suspect firms) to a sample of control firms. First, we find that firms in high‐enforcement countries use a higher discount rate to test goodwill for impairment than firms in low‐enforcement countries. We also find a more positive association between discount rate and upward cash flow management for suspect firms than for control firms. This result is consistent with suspect firms substituting optimistic valuation assumptions with inflated current cash flows. Second, we find that, relative to control firms, suspect firms exhibit higher upward cash flow management in high‐enforcement countries than in low‐enforcement countries. Third, we show that suspect firms in high‐enforcement countries are more likely to eventually impair goodwill. [ABSTRACT FROM AUTHOR]

Traditional scheduling problems are usually focused on minimising time-based objectives. In this paper, we have examined the problems in single and parallel machine scheduling. We have incorporated cash management into the objective function of these problems. It is assumed that processing a given job involves incurring a total cost and receiving a total revenue. Each job also has its own temporal pattern of cost incurring and revenue receiving. Nonetheless, the total cost/revenue of processing a job is assumed to be incurred/received during its processing and not beyond it. We have defined five new objectives: (i) maximising average available cash; (ii) minimising revenue-cost duration; (iii) minimising average cash deficiency; (iv) minimising maximum cash deficiency; and (v) maximising minimum available cash. Based on the results achieved in this paper, the above patterns do not affect the optimal scheduling policy in regards to the first two objectives. For single machine models, all except one of the problems are solved in polynomial time. For parallel machines, all models are proved to be NP-hard. Some of the NP-hard models are convertible to equivalent traditional ones. [ABSTRACT FROM AUTHOR]

This study is a design of an alternative real value hybrid model for the valuation of reversionary leasehold investment properties characterized by divergence in the revision period of sub-rent and head rent respectively. The development of this model commenced with a synthesis of inputs for the modified rational- and real value hybrid models, and the derivation of an equivalent cash flow multiplier for terminal investments. With exception of the generic real value model, term incomes across all other contemporary models including the alternative real value hybrid model were discounted using the equated yield. The discounted reversionary cash flows in the valuation template associated with the alternative real value hybrid model appears identical to that in the generic real value model, while exhibiting itself as a surrogate reversionary income multiplier for the modified rational, and the real value/short-cut DCF models respectively. The alternative real value hybrid model was validated as capable of producing valuations that are identical to those churned out from all the existing contemporary models for the valuation of this category of reversionary leasehold investment property. The study is a novel attempt towards redesigning the modified rational model of leasehold investment property valuation and according it a real value perspective. [ABSTRACT FROM AUTHOR]

We report a strategy for production of 5-nonanone which is a bio-based platform chemical that can be produced in large quantity from a variety of lignocellulosic biomass sources. In this strategy, the cellulose and hemicellulose fractions of lignocellulosic biomass are catalytically converted to γ -valerolactone (GVL) using the biomass derived GVL as a solvent. To generate the integrated strategy, we develop separation subsystems to achieve high purity of product. Importantly, GVL can be upgraded to 5-nonanone with high yield in a single reactor using a dual catalyst bed of Pd/Nb 2 O 5 plus ceria-zirconia. We design a heat exchanger network to satisfy the total energy requirements of the integrated process via combusting lignin fraction of biomass. Economic feasibility of the process is investigated using discounted cash flow analysis. • Cellulose and hemicellulose are catalytically converted to γ -valerolactone (GVL). • GVL is catalytically upgraded to 5-nonanone without formation of pentanoic acid. • Lignin fraction of lignocellulosic biomass is used to generate heat and power. • Discounted cash flow analysis is used to determine the minimum selling price (MSP). • Sensitivity analysis is conducted for key economic and process parameters. [ABSTRACT FROM AUTHOR]

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Daimler, the German car manufacturer, had acquired a stake in Tesla for USD 50 million in May 2009. The investment in Tesla had been motivated strategically, as Daimler wanted to cooperate with the sole manufacturer in North America and Europe selling battery-driven vehicles capable of covering long distances. The two companies intended to collaborate in the development of batteries, electric drives, and specific vehicle models. The share price of Tesla had increased during 2013 and had reached USD 242.68 on September 30th of 2014. At that time, Daimler held a 3.97 % stake in Tesla with a market value of about USD 1.2 billion. The case deals with the decision to be made by Daimler in the fall of 2014 whether to hold the Tesla shares or sell them. It requires both a financial and a strategic analysis. The financial analysis should contain a cash flow forecast and a discounted cash flow valuation. Thus, Daimler has to come up with an intrinsic value per share that can be compared to the current market value of the share. A valuation by multiples can be used for plausibility checks. The strategic analysis has to answer the question whether the strategic advantages (or disadvantages) depend upon holding the Tesla shares. [ABSTRACT FROM AUTHOR]

A large-scale hydrogen supply chain is an alternative for the transportation of energy generated from a renewable energy source. Utilizing this technology would drastically improve the generation of clean energy. Therefore, an analysis method to estimate the economic and environmental benefits of the introduction of a hydrogen supply chain using an existing pipeline is developed. The proposed method first estimates the energy and exergy flows in the system to calculate the overall efficiency of these quantities. Afterward, the payback period is estimated based on the overall energy efficiency using the discounted cash flow (DCF) method. The overall efficiency of the system, based on the energy analysis presented, would seem to be the final delivered electrical, fuel and useable heat energy delivered to end use divided by the input solar and wind energy. Furthermore, the environmental effects due to the introduction of the systems are evaluated considering the reduction of global warming and air pollution gases, such as CO 2 and PM2.5. The proposed analysis method was applied considering a natural gas pipeline that connects Qinghai and Shanghai. As a result, conversion ratios of 24.9% for electricity and 17.5% for heat were achieved, with the overall efficiency of the system of 42.4% based on the electricity obtained from photovoltaics. 3.02 Gt of CO 2 , 104 kt of SO x , and 134 kt of NO x , which represent 3.3%, 0.5%, and 0.6% of the annual discharge in China, respectively, and 8.66 kt of PM2.5 would be reduced every year. Furthermore, a reduction of 953 Mt in coal consumption is expected. The payback period of the proposed system using the DCF method is 4.17 and 2.28 years for the two alternatives evaluated in this work. The cash flow of the DCF is influenced by installation cost and operation cost of equipment. • Introductory method of a hydrogen supply chain using gas pipeline was shown. • Economic and environmental benefits were clarified from the energy flow. • Potentiality of a large-scale clean energy using hydrogen was suggested. • Gas pipeline currently installed between Qinghai and Shanghai was analyzed. [ABSTRACT FROM AUTHOR]

The theoretical background of RIM (residual income model) has been present in the literature since the first half of the 20th century, however, in terms of practical applications, it could never become a real alternative of the DCF (discounted cash flow) model. In the last decades, RIM has gained attention again owing to the international studies investigating its explanatory power on stock prices compared to DCF, but the empirical results were mixed. This study aims to extend the literature with further empirical findings, which may support the better understanding of the usefulness of RIM and the DCF model, and help investors increase the efficiency of stock valuations. Based on an owncollected panel consisting of 34 global companies' data for the 2013-2019 period, the authors show that RIM can outperform the traditional DCF model, but its explanatory power lags behind that of DCF's smoothed version that handles the distortions originating from the timing differences between earnings and cash flows. It is also found that application of a growth period in cash flow forecasts is questionable as the authors' independent variables computed with the perpetual annuity model perform much better in explaining stock prices than the independent variables determined based on the two-stage model containing an explicit growth period. [ABSTRACT FROM AUTHOR]

The Loss Period If the plaintiff is able to demonstrate that lost profits are actually available under the contract, it will typically then have to establish the applicable duration for which lost profits are recoverable. [140] Based upon the court's evaluation of the Cajun Joe's brand, it declined to permit the franchisee to collect lost future profits because the brand was a brand new fast-food franchise without a history of losses or profits and, thus, subject to the new business rule. The court further found that, even if the new business rule had not precluded the plaintiff's theory of lost profits, the plaintiff failed to offer sufficient evidence to establish the reasonable degree of certainty necessary to obtain future lost profits. Contractual lost-profits-damages disclaimers are generally enforceable.[147] When constructing a lost-profits disclaimer, it is important to understand that lost profits can be considered as either direct or consequential damages. & Rock Island R.R. Co. v. Ward, 16 Ill. 522, 530-31 (1855) (finding that farmer could recover lost profits where railroad breached covenant to maintain fence); Bridges v. Stickney, 38 Me. 361, 368 (1854) (allowing recovery of direct damages but not consequential damages); Simmons v. Brown, 5 R.I. 299, 302-03 (1858) (relying on Masterton to allow a mill owner to recover lost profits where defendant's damn reduced water flow at the mill); Hoy v. Gronoble, 34 Pa. 9, 10-11 (1859) (enabling sharecropper to recover profits lost when landowner breached oral contract); Hinckley v. Beckwith, 13 Wis. 31, 35 (1860) (holding that the lost profits of sawmill were recoverable). [Extracted from the article]

A problem for mining districts, for example those with small to medium operations, is the uncertainty with respect to the valuation of exploration targets. In cases where a mining district has been only partially developed, geological uncertainty likely represents a substantial part of resource valuation risk. To address this problem, we developed a method for valuing exploration targets in the early stage of exploration based on four variables: (1) risks associated with exploration; (2) geological uncertainty; (3) economic potential; and (4) exploration costs. The new method presented offers a simple and replicable means to value mineralized bodies and prioritize mining activities based on quantitative geoscientific information and can additionally be adapted to analyze other exploration projects, such as those located in areas without mining activity. In this work, we studied a series of Cu–Ag and Au veins located in the Tiltil Mining District in the Coastal Cordillera of the Chilean Central Andes. We performed four steps in order to characterize the level of uncertainty in the resource exploration and valuation: (1) we acquired district-level data on the geology in and around Tiltil and the activity of 39 small mining operations; (2) we designed a preliminary conceptual exploration campaign; (3) we applied and adapted a new method for the valuation of mineral resources; and (4) we estimated the economic value of the studied mineral targets. The valuation method uses the product of three mutually independent variables: potential value, exploration risk, and geological uncertainty. The estimated value of minerals, at Tiltil, without discounting cash flows is 50.2 billion CLP, while a discount rate of 15.62% returns an estimate of 26.7 billion CLP. When adjusting these values for the level of geological uncertainty discerned in our method, the resulting values are approximately 56% less. We additionally applied the valuation method to seven potential mining targets, considering both potential exploration resources and inferred resources, and found values ranging from 21.8 billion and 11.8 billion CLP (32.3 million and 17.5 million USD with an exchange rate of 675.48 CLP per USD) without discounting cash flows and with a discount rate of 15.62%. We encourage the use of this new method in the early-stage development of small mining operations in order to characterize correctly potential profitability. [ABSTRACT FROM AUTHOR]

Valuations have always been time specific and, if properly undertaken, are supposed to give a true reflection of property market conditions at any given point in time. In periods of economic decline, when properties are leased or tend to exchange hands at rents or prices lower than their true market value, a need to capture the explicit growth rate associated with an instability in the property market arises. With the Nigerian economy currently facing its worst recession in years, the onus is on valuers to adopt contemporary methods of valuation which seek to mirror the true situation of the property market at any point in time; something which, hitherto, conventional methods of valuations have failed to do. This paper therefore takes a pilot survey of the types of investment valuation models currently adopted by valuers when carrying out valuations of reversionary properties in a recession. The study seeks to highlight the knowledge gap of valuers, both in practice and in the academia, concerning the use of the Equated yield and DCF explicit growth method of valuation, and hence enlighten them and the general public on its use as a more appropriate method of valuing properties during a downturn.

Environmental sustainability in real estate continues to be of interest, and various government incentives have emerged to encourage investment in sustainability efforts. In this detailed case study, we examine one incentive, the Federal National Mortgage Association's (Fannie Mae) Green Initiative and Green Globes certification, as applied to a newly constructed multifamily complex. Using a discounted cash flow model with several scenarios, the after-tax returns for the multifamily project are examined. In this case study, we analyze the initiative's impact on the project, showing the effects of the lower financing costs. The conclusion is that in addition to societal benefits, lower operating costs, and higher rents, the rate of return can be higher for properties that utilize Green Globe's special financing.