Fuzzy IRR with Fuzzy WACC and Fuzzy MARR (original) (raw)

Abstract

In this paper, several uncertainties are considered for investment acceptability decision by IRR method. First, some parameters in weighted average cost of capital (WACC) equation are assumed to be fuzzy numbers, a fuzzy WACC is obtained, and defuzzified by t-norm and t-conorm fuzzy relations. Assuming that WACC is a minimum threshold for minimum attractive rate of return (MARR), fuzzy MARR is determined to be greater than or equals to fuzzy WACC. Finally, by assuming the net cash flows to be fuzzy numbers, a fuzzy IRR formula is obtained, defuzzified by t-norm and t-conorm fuzzy relations, and the results are compared to fuzzy MARR to evaluate the acceptability of a pure and simple investment. This study is an extension of Bas (2008) where t-norm and t-conorm fuzzy relations are considered for the defuzzification of fuzzy IRR formula.

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Authors and Affiliations

  1. Department of Industrial Engineering, Istanbul Technical University, Macka, Istanbul, Turkey
    Esra Bas

Editor information

Editors and Affiliations

  1. Faculty of Economics, University of Catania, Corso Italia, 55, 95129, Catania, Italy
    Salvatore Greco & Benedetto Matarazzo &
  2. CNRS UMR 7606, DAPA, LIP6 8, Université Pierre et Marie Curie - Paris6, rue du Capitaine Scott, F-75015, Paris, France
    Bernadette Bouchon-Meunier
  3. Dip. Matematica e Informatica, Università di Perugia, 06123, Perugia, Italy
    Giulianella Coletti
  4. Department of Computer and Management Science, University of Trento, Via Inama 5, 38122, Trento, Italy
    Mario Fedrizzi
  5. Machine Intelligence Institute — IONA College,, 10801, New Rochelle, NY, USA
    Ronald R. Yager

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© 2012 Springer-Verlag Berlin Heidelberg

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Bas, E. (2012). Fuzzy IRR with Fuzzy WACC and Fuzzy MARR. In: Greco, S., Bouchon-Meunier, B., Coletti, G., Fedrizzi, M., Matarazzo, B., Yager, R.R. (eds) Advances in Computational Intelligence. IPMU 2012. Communications in Computer and Information Science, vol 300. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-31724-8\_41

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