Methodological Process Named Risk-Adjusted Net Present Value (RANPV), for the Financial Evaluation of Investment Projects

Methodological Process Named Risk-Adjusted Net Present Value (RANPV), for the Financial Evaluation of Investment Projects

This article proposes a measure for the financial evaluation of investment projects, which considers risk, through incorporating the Value at Risk technique. An empirical test on one project is presented to show its efficacy. This is part of a research which applied it to 15 projects, with results w...

Full description

Saved in:
Bibliographic Details
Main Authors: Guigui-Gámez, René, Salas-Harms, Héctor
Format: Online
Language:spa
Published: ACACIA A.C. 2022
Online Access:https://cienciasadmvastyp.uat.edu.mx/index.php/ACACIA/article/view/308
Tags: Add Tag
No Tags, Be the first to tag this record!
id oai:ojs.pkp.sfu.ca:article-308
record_format ojs
spelling oai:ojs.pkp.sfu.ca:article-3082022-09-01T06:08:11Z Methodological Process Named Risk-Adjusted Net Present Value (RANPV), for the Financial Evaluation of Investment Projects Proceso Metodológico Denominado Valor Presente Neto Ajustado al Riesgo (VPNAR), para la Evaluación Financiera de Proyectos de Inversión Guigui-Gámez, René Salas-Harms, Héctor Finanzas Corporativas Evaluación Financiera de Proyectos de Inversión Valor en Riesgo Corporate Finance Capital Budgeting Value at Risk This article proposes a measure for the financial evaluation of investment projects, which considers risk, through incorporating the Value at Risk technique. An empirical test on one project is presented to show its efficacy. This is part of a research which applied it to 15 projects, with results which proved superior to the ones produced by the traditional methodologies. The Discounted Cash Flows method was applied, incorporating the Value at Risk (VaR) procedure, which would provide a decision criterion, based on a given confidence level. This leads to the Risk-Adjusted Net Present Value (RANPV) method. The decision rules are the project is accepted with a confidence level of 1-alpha if the risk-adjusted NPV (RANPV) in the given confidence level is greater than or equal to zero; otherwise, it is unacceptable. Alternatively, the project is acceptable if the confidence level calculated at the point of zero VPN is equal to or greater than the predetermined confidence level; otherwise, it is unacceptable. Este artículo propone una metodología para la evaluación financiera de proyectos de inversión, que considere el riesgo, por medio de la homologación de la técnica del Valor en Riesgo. Se presenta una prueba empírica con un proyecto para demostrar su eficacia. Esto forma parte de una investigación más amplia que aplicó a 15 proyectos, obteniéndose resultados superiores a los de las metodologías tradicionales. Se aplicó el método de Flujos de Efectivo Descontados, incorporando el procedimiento del Valor en Riesgo (VaR), con lo cual se proporciona un criterio de decisión, con base a un nivel de confianza predeterminado. Esto conduce al método del Valor Presente Neto Ajustado al Riesgo (VPNAR). Las reglas de decisión son: el proyecto es aceptado con un nivel de confianza de 1-alfa si el VPN ajustado al riesgo (VPNAR) en la confianza dada es mayor o igual que cero; de lo contrario, es inaceptable. ACACIA A.C. 2022-09-01 info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion Artículo revisado por pares application/pdf text/html https://cienciasadmvastyp.uat.edu.mx/index.php/ACACIA/article/view/308 10.46443/catyp.v18i1.308 Ciencias Administrativas. Teoría y Praxis; Vol. 18 No. 1 (2022): ENERO - JUNIO; 136 - 152 Ciencias Administrativas. Teoría y Praxis; Vol. 18 Núm. 1 (2022): ENERO - JUNIO; 136 - 152 2683-1465 2683-1457 spa https://cienciasadmvastyp.uat.edu.mx/index.php/ACACIA/article/view/308/351 https://cienciasadmvastyp.uat.edu.mx/index.php/ACACIA/article/view/308/352 http://creativecommons.org/licenses/by-nc-nd/4.0
institution CIENCIAS ADMINISTRATIVAS
collection OJS
language spa
format Online
author Guigui-Gámez, René
Salas-Harms, Héctor
spellingShingle Guigui-Gámez, René
Salas-Harms, Héctor
Methodological Process Named Risk-Adjusted Net Present Value (RANPV), for the Financial Evaluation of Investment Projects
author_facet Guigui-Gámez, René
Salas-Harms, Héctor
author_sort Guigui-Gámez, René
title Methodological Process Named Risk-Adjusted Net Present Value (RANPV), for the Financial Evaluation of Investment Projects
title_short Methodological Process Named Risk-Adjusted Net Present Value (RANPV), for the Financial Evaluation of Investment Projects
title_full Methodological Process Named Risk-Adjusted Net Present Value (RANPV), for the Financial Evaluation of Investment Projects
title_fullStr Methodological Process Named Risk-Adjusted Net Present Value (RANPV), for the Financial Evaluation of Investment Projects
title_full_unstemmed Methodological Process Named Risk-Adjusted Net Present Value (RANPV), for the Financial Evaluation of Investment Projects
title_sort methodological process named risk-adjusted net present value (ranpv), for the financial evaluation of investment projects
description This article proposes a measure for the financial evaluation of investment projects, which considers risk, through incorporating the Value at Risk technique. An empirical test on one project is presented to show its efficacy. This is part of a research which applied it to 15 projects, with results which proved superior to the ones produced by the traditional methodologies. The Discounted Cash Flows method was applied, incorporating the Value at Risk (VaR) procedure, which would provide a decision criterion, based on a given confidence level. This leads to the Risk-Adjusted Net Present Value (RANPV) method. The decision rules are the project is accepted with a confidence level of 1-alpha if the risk-adjusted NPV (RANPV) in the given confidence level is greater than or equal to zero; otherwise, it is unacceptable. Alternatively, the project is acceptable if the confidence level calculated at the point of zero VPN is equal to or greater than the predetermined confidence level; otherwise, it is unacceptable.
publisher ACACIA A.C.
publishDate 2022
url https://cienciasadmvastyp.uat.edu.mx/index.php/ACACIA/article/view/308
work_keys_str_mv AT guiguigamezrene methodologicalprocessnamedriskadjustednetpresentvalueranpvforthefinancialevaluationofinvestmentprojects
AT salasharmshector methodologicalprocessnamedriskadjustednetpresentvalueranpvforthefinancialevaluationofinvestmentprojects
AT guiguigamezrene procesometodologicodenominadovalorpresentenetoajustadoalriesgovpnarparalaevaluacionfinancieradeproyectosdeinversion
AT salasharmshector procesometodologicodenominadovalorpresentenetoajustadoalriesgovpnarparalaevaluacionfinancieradeproyectosdeinversion
_version_ 1779057855737888768

Similar Items