Fuzzy IRR with fuzzy WACC and fuzzy MARR

Esra Bas

doi:10.1007/978-3-642-31724-8_41

Fuzzy IRR with fuzzy WACC and fuzzy MARR

Esra Bas^*

^*Corresponding author for this work

Department of Industrial Engineering

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › peer-review

1 Citation (Scopus)

Abstract

In this paper, several uncertainties are considered for investment acceptability decision by IRR method. First, some parameters in weighted average cost of capital (WACC) equation are assumed to be fuzzy numbers, a fuzzy WACC is obtained, and defuzzified by t-norm and t-conorm fuzzy relations. Assuming that WACC is a minimum threshold for minimum attractive rate of return (MARR), fuzzy MARR is determined to be greater than or equals to fuzzy WACC. Finally, by assuming the net cash flows to be fuzzy numbers, a fuzzy IRR formula is obtained, defuzzified by t-norm and t-conorm fuzzy relations, and the results are compared to fuzzy MARR to evaluate the acceptability of a pure and simple investment. This study is an extension of Bas (2008) where t-norm and t-conorm fuzzy relations are considered for the defuzzification of fuzzy IRR formula.

Original language	English
Title of host publication	Advances in Computational Intelligence - 14th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems, IPMU 2012, Proceedings
Pages	393-402
Number of pages	10
Edition	PART 4
DOIs	https://doi.org/10.1007/978-3-642-31724-8_41
Publication status	Published - 2012
Event	14th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems, IPMU 2012 - Catania, Italy Duration: 9 Jul 2012 → 13 Jul 2012

Publication series

Name	Communications in Computer and Information Science
Number	PART 4
Volume	300 CCIS
ISSN (Print)	1865-0929

Conference

Conference	14th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems, IPMU 2012
Country/Territory	Italy
City	Catania
Period	9/07/12 → 13/07/12

Keywords

fuzzy IRR
fuzzy MARR
Fuzzy WACC
t-norm/t-conorm fuzzy relations

Access to Document

10.1007/978-3-642-31724-8_41

Cite this

Bas, E. (2012). Fuzzy IRR with fuzzy WACC and fuzzy MARR. In Advances in Computational Intelligence - 14th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems, IPMU 2012, Proceedings (PART 4 ed., pp. 393-402). (Communications in Computer and Information Science; Vol. 300 CCIS, No. PART 4). https://doi.org/10.1007/978-3-642-31724-8_41

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title = "Fuzzy IRR with fuzzy WACC and fuzzy MARR",

abstract = "In this paper, several uncertainties are considered for investment acceptability decision by IRR method. First, some parameters in weighted average cost of capital (WACC) equation are assumed to be fuzzy numbers, a fuzzy WACC is obtained, and defuzzified by t-norm and t-conorm fuzzy relations. Assuming that WACC is a minimum threshold for minimum attractive rate of return (MARR), fuzzy MARR is determined to be greater than or equals to fuzzy WACC. Finally, by assuming the net cash flows to be fuzzy numbers, a fuzzy IRR formula is obtained, defuzzified by t-norm and t-conorm fuzzy relations, and the results are compared to fuzzy MARR to evaluate the acceptability of a pure and simple investment. This study is an extension of Bas (2008) where t-norm and t-conorm fuzzy relations are considered for the defuzzification of fuzzy IRR formula.",

keywords = "fuzzy IRR, fuzzy MARR, Fuzzy WACC, t-norm/t-conorm fuzzy relations",

author = "Esra Bas",

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series = "Communications in Computer and Information Science",

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Bas, E 2012, Fuzzy IRR with fuzzy WACC and fuzzy MARR. in Advances in Computational Intelligence - 14th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems, IPMU 2012, Proceedings. PART 4 edn, Communications in Computer and Information Science, no. PART 4, vol. 300 CCIS, pp. 393-402, 14th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems, IPMU 2012, Catania, Italy, 9/07/12. https://doi.org/10.1007/978-3-642-31724-8_41

Fuzzy IRR with fuzzy WACC and fuzzy MARR. / Bas, Esra.
Advances in Computational Intelligence - 14th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems, IPMU 2012, Proceedings. PART 4. ed. 2012. p. 393-402 (Communications in Computer and Information Science; Vol. 300 CCIS, No. PART 4).

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › peer-review

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AB - In this paper, several uncertainties are considered for investment acceptability decision by IRR method. First, some parameters in weighted average cost of capital (WACC) equation are assumed to be fuzzy numbers, a fuzzy WACC is obtained, and defuzzified by t-norm and t-conorm fuzzy relations. Assuming that WACC is a minimum threshold for minimum attractive rate of return (MARR), fuzzy MARR is determined to be greater than or equals to fuzzy WACC. Finally, by assuming the net cash flows to be fuzzy numbers, a fuzzy IRR formula is obtained, defuzzified by t-norm and t-conorm fuzzy relations, and the results are compared to fuzzy MARR to evaluate the acceptability of a pure and simple investment. This study is an extension of Bas (2008) where t-norm and t-conorm fuzzy relations are considered for the defuzzification of fuzzy IRR formula.

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Fuzzy IRR with fuzzy WACC and fuzzy MARR

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