Monte Carlo on Net Present Value for Capital Investment in Malaysia

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• 作者：Siti Salihah Shaffie^a ; ^{salihahshaffie@gmail.com" class="auth_mail" title="E-mail the corresponding author} ; Saiful Hafizah Jaaman^b
• 关键词：Capital budgeting ; cash flow estimation ; Monte Carlo simulation ; net present value ; risk analysis
• 刊名：Procedia - Social and Behavioral Sciences
• 出版年：2016
• 出版时间：31 May 2016
• 年：2016
• 卷：219
• 期：Complete
• 页码：688-693
• 全文大小：129 K

文摘

Capital investment becomes crucial investment decision in uncertain economic environment need to be made. Two major pitfall of classical net present value are uncertainty and managerial flexibilities. These drawbacks lead to imprecise cash flows estimation. This study proposes the employment of the Monte Carlo method in the NPV model in order to achieve reliable cash flows estimation. Monte Carlo provides the risk analysis which can be adopted by investors in making capital budgeting decisions. Result of this study found that Monte Carlo is an appropriate tool to embed in NPV model.