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Fuzzy IRR with Fuzzy WACC and Fuzzy MARR

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Advances in Computational Intelligence (IPMU 2012)

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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© 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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  • DOI: https://doi.org/10.1007/978-3-642-31724-8_41

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-31723-1

  • Online ISBN: 978-3-642-31724-8

  • eBook Packages: Computer ScienceComputer Science (R0)

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