Economic Appraisal of Investment Projects in Solar Energy under Uncertainty via Fuzzy Real Option Approach (Case Study: a 2-MW Photovoltaic Plant in South of Isfahan, Iran)
Journal Title: Advances in Mathematical Finance and Applications - Year 2018, Vol 3, Issue 4
Abstract
Investment in renewable energies especially solar energies is encountered with numerous uncertainties considering the increased dynamism in economic and financial conditions and makes investment in this field irreversible to a large extent, paying attention to modern methods of economic appraisal of such investments is highly important. A framework is provided in the current study in order to employ the real option theory in evaluation of photovoltaic plants comparing with traditional methods. To this end, first, uncertainty factors of these plants in Isfahan province (one of highly susceptible regions in Iran) are identified from the view point of experts and impact factor of each one on interests and expenses of the above plant will be evaluated in order to insert these parameters in the form of fuzzy numbers in the model for better coverage of uncertainty. Then, the project under study is evaluated through both traditional methods and fuzzy real option approach with the help of Black-Scholes model and the results are compared. The results disclosed that investment value in these plants is increased if real expansion and abandonment options are considered. As a result, the real option theory has a higher adequacy than the traditional methods for evaluation of projects.
Authors and Affiliations
Mohammad Mashhadizadeh, Mohsen Dastgir, Soheil Salahshour
Keywords
Related Articles
- EP ID EP461069
- DOI 10.22034/AMFA.2019.574157.1116
- Views 70
- Downloads 0
The Relationship between Capital Investment Choice and Capital Productivity: A Test of Firm Life Cycle Theory (A Comparative Investigation of Cyclical and Non-Cyclical Companies)
According to the firm life cycle theory, companies go through certain behavioral patterns in various stages of their life. A thorough understanding and recognition of these behavioral patterns, new investment in assets a...
Designing Native Decision-Making Model for Selecting Venture Capital Investment in Emerging Companies
Venture capital companies play an important role in the economy of countries and greatly influences economic and employment growth. VC is the provision of capital for companies and entrepreneurs that is prone to leaping...
Studying the Role of Marketing Intensity on the Relation of Financial Leverage and Firm Function
Choosing the financial supply is one of the most important decisions for providing optimal structure that can be effective for firm value and stocks market of companies. Therefore, marketing as one of the abilities of th...
Confidence Interval for Solutions of the Black-Scholes Model
The forecast is very complex in financial markets. The reasons for this are the fluctuation of financial data, Such as Stock index data over time. The determining a model for forecasting fluctuations, can play a signific...
Fair Value Accounting for Liabilities and Own Credit Risk
Changes in credit risk may arise when either the value or the risk of corporate assets changes. Changes in the equity value associated with the changes in the asset value and changes in asset risk can be characterized in...