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CREATION OF OPTIMAL PERFORMANCE OF AN INVESTMENT PROJECT

Višnja Vojvodić Rosenzweig ; Faculty of Economics and Business, University of Zagreb, Croatia
Hrvoje Volarević orcid.org/0000-0002-2184-956X ; Zagreb School of Economics and Management, Croatia

Sažetak

The selection of an investment project is formulated as a multi-criteria decision-making problem. This paper presents a case in which the decision-maker uses nine criteria or rather attributes (Net Present Value, Internal Rate of Return, Payback Period, Accounting Rate of Return, Cumulative Cash Flows, Return on Investment, Net Profit Margin, Interest Coverage Ratio and Current Ratio). Individual utility functions are constructed for each attribute separately, as well as a global utility function representing a weighted sum of individual utility functions. For every attribute a finite set of ordered pairs or utility points is determined, taking into account the decision-maker’s assessment. The given points are then approximated by the utility function. Finally, according to the decision-maker’s assessment the optimization problem is solved with the purpose of achieving an optimal performance for each project. By way of negotiation the performances on offer approach the optimal performance of the project with the purpose of realising an agreement between the decision-maker and the investor.

Ključne riječi

Investment Project; Multi-Criteria Decision-Making; Utility Function; Negotiation

Hrčak ID:

93442

URI

https://hrcak.srce.hr/93442

Datum izdavanja:

22.12.2010.

Posjeta: 1.595 *