Modified Net Present Value under Uncertainties: An Approach Based on Fuzzy Numbers and Interval Arithmetic
This paper presents an alternative approach to capital budgeting, named fuzzy modified net present value (fuzzy MNPV) method, for evaluation of investment projects under uncertainty. Triangular fuzzy numbers are used to represent uncertainty of cash flows and of reinvestment, financing and risk-adjusted discount rates. Due to the complexity of the calculations involved, a new financial function for MS-Excel has been developed (MNPVfuzzy). To illustrate the use of the model and of the function, numerical examples are supplied. Results show that the proposed method is more advantageous and simpler to use than other methods for evaluation of investment under uncertainty.
KeywordsCapital Budgeting Modified Net Present Value Triangular Fuzzy Numbers Interval Arithmetic
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