Research Article
Performance Analysis of Different Investment Decision Models in Terms of Analytical Evaluation
@INPROCEEDINGS{10.4108/eai.18-11-2022.2326937, author={Rubing Chen and Suheng Ji and Kexin Lyu and Yiqing Zhou}, title={Performance Analysis of Different Investment Decision Models in Terms of Analytical Evaluation}, proceedings={Proceedings of the 4th International Conference on Economic Management and Model Engineering, ICEMME 2022, November 18-20, 2022, Nanjing, China}, publisher={EAI}, proceedings_a={ICEMME}, year={2023}, month={2}, keywords={npv; irr; payback period; real option; investment decision}, doi={10.4108/eai.18-11-2022.2326937} }- Rubing Chen
Suheng Ji
Kexin Lyu
Yiqing Zhou
Year: 2023
Performance Analysis of Different Investment Decision Models in Terms of Analytical Evaluation
ICEMME
EAI
DOI: 10.4108/eai.18-11-2022.2326937
Abstract
Investment decisions are the most critical ones among all enterprises' decisions, which determines the future of enterprises. This paper aims to provide a comprehensive overview of the progress of investment decisions and compare the efficiency of four different investment models (NPV, IRR, payback period, and real option approach) based on analytical calculation and evaluation empirically. We present the background and definition of those models, as well as their basic calculation formula and simulation processing. To metric the accuracy applicability and performances of the four approaches, the empirical models are constructed and evaluated for a certain condition and the comparisons of results are demonstrated accordingly. Furthermore, based on the analysis, the advantages and preferred application situations of the four models are also discussed. Finally, some issues and limitations remaining in the approaches are outlined, which are expected to be addressed in the future. These results shed light on the implementation of the existing investment decision rules in different conditions.
