In this paper we study the evaluation problems for random cash flows. We first consider the evaluation of random variables, which are supposed to present the random present values (RPV) of cash flows, and investigate what the suitable evaluation functional of RPV is. We see that the concave monetary value measure (or concave monetary utility function) is the most suitable candidate for this end. Next we extend the value measure to a dynamic value measure. Then we see that the idea of time-consistency is very important, and that the dynamic entropic value measure is the best one. We can see that this dynamic value measure is related to the risk sensitive control. And finally we conclude that the risk sensitive value measure method, which is a combination of the ideas such that monetary utility function, indifference price, real option approach, time-consistency and risk sensitive control, should be the most powerful method for the project evaluation. We also explain how to apply our results to practical problems.
Decision making in business planning is an essential managerial activity to invest corporate resources. Spreadsheet software like Excel is commonly utilized in financial planning in business decision. The dynamic re-calculation function of spreadsheet makes users to perform so called "What-If analysis", that is to change decisional and/or environmental values and to observe objective values like NPV with a financial model described on a spreadsheet. The "VI(Visual Interactive)-What-If" contrived by the researcher is an extended feature to Excel to change cell values by moving a mouse on slide bars instead of using a keyboard. The dynamic and continuous data change shows the financial model as "animation". The VI-What-If is expected to make users to handle financial models not only efficiently but also effectively because of its cognitive effect. This study is to research how the function affects quality of decisions in business planning by conducting user experiment. It was found that VI-What-If function affects users to recognize more risk and reduce overconfidence.
In equilibrium duopoly market, it is expected that the market share of each firm will change according to the investment of follower firm. Influence on the project value and investment probability, due to the change in market share, is one of the major concerns for the management. In this paper, the payoff structure of each firm, as a consequence of the variance in market share after investment as well as investment scale (unit), will be analyzed. In a market in which certain share will be lost if one does not invest, tendency for preemptive investment, due to instinctive sense of fear losing the market, is often seen in a real decision making. In this paper, also optimality and/or preferability of such decision making will be discussed.
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