Constructing a Fuzzy Net Present Value Method to Evaluating the BOT Sport Facilities
Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 33093
Constructing a Fuzzy Net Present Value Method to Evaluating the BOT Sport Facilities

Authors: Huei-Fu Lu

Abstract:

This paper is to develop a fuzzy net present value (FNPV) method by taking vague cash flow and imprecise required rate of return into account for evaluating the value of the Build-Operate-Transfer (BOT) sport facilities. In order to clearly manifest a more realistic capital budgeting model based on the classical net present value (NPV) method, some uncertain financial elements in NPV formula will be fuzzified as triangular fuzzy numbers. Through the conscientious manipulation of fuzzy set theory, we will find that the proposed FNPV model is a more explicit extension of classical (crisp) model and could be more practicable for the financial managers to capture the essence of capital budgeting of sport facilities than non-fuzzy model.

Keywords: Fuzzy sets; Capital budgeting, Sport facility, Net present value (NPV), Build-Operate-Transfer (BOT) scheme

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1057617

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 2032

References:


[1] G. C. Biddle, R.M. Bowen, and J. S. Wallace, "Evidence on EVA," J. Appl. Corp. Financ., vol. 12, no. 2, pp. 69-79, 1999.
[2] H. Bierman, "Capital budgeting in 1992: A survey," Financ. Manag., vol. 22, no. 3, p. 24, 1993.
[3] Brealey, R.A., and Myers, S. C. Principles of Corporate Finance, 6th ed., New York: McGraw-Hill, 2000.
[4] Brigham, E.F., and Ehrhardt, M. C. Financial Management: Theory and Practice, 11th ed., New York: South-Western Thomson, 2005.
[5] J. J. Buckley, "The fuzzy mathematics of finance," Fuzzy Set. Syst., vol. 21, no. 3, pp. 257-273, 1987.
[6] M. S. Chen, H. F. Lu, and H. W. Lin, "Are the nonprofit organizations suitable to engage in BOT or BLT scheme? A feasible analysis for the relationship of private and nonprofit sectors," Int. J. Proj. Manag., vol.24, no. 3, pp. 244-252, 2006.
[7] M. L. Calzi, "Towards a general setting for the fuzzy mathematics of finance," Fuzzy Set. Syst. vol.35, no. 3, pp. 265-280, 1990.
[8] T. Copeland, T. Koller, and J. Murrin, Valuation: Measuring and Managing the Value of Companies, Wiley, New York, 1990.
[9] A. K. Dixit, and R. S. Pindyck, Investment under Uncertainty, Princeton University Press, New Jersey, 1994.
[10] H. Dourra, and P. Siy, "Investment using technical analysis and fuzzy logic," Fuzzy Set. Syst., vol. 127, no.2, pp. 221-240, 2002.
[11] J. R. Graham, and C. R. Harvey, "The theory and practice of corporate finance: evidence from the field," J. Financ. Econ., vol. 60, no. 2-3, pp. 187-243, 2001.
[12] C. Kahraman, D. Ruan, and E. Tolga, "Capital budgeting techniques using discounted fuzzy versus probabilistic cash flows," Inform. Sci., vol. 142, no. 1-4, pp. 57-76, 2002.
[13] A. Kaufmann, and M. M. Gupta, Introduction to Fuzzy Arithmetic: Theory and Applications, Van Nostrand Reinhold, New York, 1991.
[14] D. Kuchta, Fuzzy capital budgeting, Fuzzy Set. Syst., vol. 111, no. 3, pp. 367-385, 2000.
[15] M. M. Kumaraswamy, and X. Q. Zhang, "Governmental role in BOT-led infrastructure development," Int. J. Proj. Mana., vol. 19, no. 4, pp. 195-205, 2001.
[16] C.A. Magni, "Investment decisions in the theory of finance: Some antinomies and inconsistencies," Eur. J. Oper. Res., vol. 137, no. 1, pp. 206-217, 2002.
[17] P. M. Pu, and Y. M. Liu, "Fuzzy topology 1, neighborhood structure of a fuzzy point and Moore-smith convergence," J. Math. Anal. Appl., vol. 76, no. 2, pp. 571-599, 1980.
[18] R. K. S, Rao, Financial Management: Concepts and Applications, MacMillan, New York, 1992.
[19] S. A. Ross, R. W. Westerfield, and J. F. Jaffe, Corporate Finance, 7th ed., Homewood, McGraw-Hill/Irwin, IL, 2005.
[20] E. C. Schwarz, S. A. Hall, and S. Shibli, Sport Facility Operations Management: A Global Perspective, Oxford, Butterworth-Heinemann, United Kindom, 2010.
[21] W. F. Sharpe, G. J. Alexander, and J. V. Bailey, Investments, 6th ed., Upper Saddle River, Prentice-Hall, New Jersey, 1999.
[22] G. B. Stewart, The Quest for Value: The EVATM Management Guide, Harper Collins, Publishers Inc., Philadelphia, 1991.
[23] S. Turner, and P. Morrell, "An evaluation of airline beta values and their application in calculating the cost of equity capital," J. Air Transport Manag., vol. 9, no. 4, pp. 201-209, 2003.
[24] M. L. Walker, and D. K. Stotlar, Sport Facility Management, Jones and Bartlett, London, 1997.
[25] J. S. Yao, M. S. Chen, and H. W. Lin, "Valuation by using a fuzzy discounted cash flow model," Expert Syst. Appl., vol. 28, no. 2, pp. 209-222, 2005.
[26] J. S. Yao, and K. M. Wu, "Ranking fuzzy numbers based on decomposition principle and signed distance," Fuzzy Set. Syst., vol. 116, no. 2, pp. 275-288, 2000.
[27] L.A. Zadeh, "Fuzzy sets," Inform. Control., vol. 8, no. 3, pp. 338-353, 1965.