Using the Net Present Value Rule to Make Value-Creating Investment Decisions

Hui Xu
2015 Proceedings of the International Conference on Chemical,Material and Food Engineering   unpublished
At present, most of the researches on net present value are focused on single objective cases. This paper discusses net present value problem with upper level multiobjective optimization. In order to solve the problem efficiently, we present a genetic algorithm using interpolation. According to the NPV rule, if the investment has a positive (negative) NPV it creates (destroys) value and should be undertaken (rejected) .The NPV rule is a good investment decision rule because it adjusts the
more » ... t adjusts the investment's expected cash flows for both their timing and risk and has the convenient property of being additive. Most important is the capacity of the NPV method to evaluate the valuecreating potential of an investment proposal. In addition, the NPV of an investment proposal is an estimate of the current value the proposal will create or destroy if undertaken. Keywords-net present value; investment decisions; capital investment process; capital budgeting; objective optimization I.
doi:10.2991/cmfe-15.2015.153 fatcat:ckl4zpgxxjgrrkv34d5c6p4ajy