TY - JOUR

T1 - Applications of fuzzy capital budgeting techniques

AU - Kahraman, Cengiz

AU - Gülbay, Murat

AU - Ulukan, Ziya

PY - 2006

Y1 - 2006

N2 - In an uncertain economic decision environment, an expert's knowledge about dicounting cash flows consists of a lot of vagueness instead of randomness. Cash amounts and interest rates are usually estimated by using educated guesses based on expected values or other statistical techniques to obtain them. Fuzzy numbers can capture the difficulties in estimating these parameters. In this chapter, the formulas for the analyses of fuzzy present value, fuzzy equivalent uniform annual value, fuzzy future value, fuzzy benefit-cost ratio, and fuzzy payback period are developed and some numeric examples are given. Then the examined cash flows are expanded to geometric and trigonometric cash flows and using these cash flows fuzzy present value, fuzzy future value, and fuzzy annual value formulas are developed for both discrete compounding and continuous compounding. Finally, a fuzzy versus stochastic investment analysis is examined by using the probability of a fuzzy event.

AB - In an uncertain economic decision environment, an expert's knowledge about dicounting cash flows consists of a lot of vagueness instead of randomness. Cash amounts and interest rates are usually estimated by using educated guesses based on expected values or other statistical techniques to obtain them. Fuzzy numbers can capture the difficulties in estimating these parameters. In this chapter, the formulas for the analyses of fuzzy present value, fuzzy equivalent uniform annual value, fuzzy future value, fuzzy benefit-cost ratio, and fuzzy payback period are developed and some numeric examples are given. Then the examined cash flows are expanded to geometric and trigonometric cash flows and using these cash flows fuzzy present value, fuzzy future value, and fuzzy annual value formulas are developed for both discrete compounding and continuous compounding. Finally, a fuzzy versus stochastic investment analysis is examined by using the probability of a fuzzy event.

KW - Capital budgeting

KW - Cash flow

KW - Fuzzy number

KW - Ranking method

UR - http://www.scopus.com/inward/record.url?scp=33947399183&partnerID=8YFLogxK

U2 - 10.1007/3-540-33517-x_6

DO - 10.1007/3-540-33517-x_6

M3 - Article

AN - SCOPUS:33947399183

SN - 1434-9922

VL - 201

SP - 177

EP - 203

JO - Studies in Fuzziness and Soft Computing

JF - Studies in Fuzziness and Soft Computing

ER -