IZAZOVI MODIFIKACIJE ČISTE SADAŠNJE VRIJEDNOSTI
CHALLENGES OF NET PRESENT VALUE MODIFICATION

Author(s): Dejan Mikerević, Silvije Orsag
Subject(s): Business Economy / Management, Economic policy, Financial Markets
Published by: Finrar d.o.o Banja Luka
Keywords: Net present value; adjusted present value; risk adjusted discount rate; modified netpresent value; real options;
Summary/Abstract: Financial decision-making in modern conditions characterized by globalization, a multitude of external shocks and the necessity of flexible adaptation is a key aspect of the successful operation of business entities. Therefore, it is necessary to have developed tools that would help the directors to make the right business decisions and especially whether to decide on a certain investment or abandon it, based on the relevant quantitative results. The paper considers the concept and limitations of the net present value, especially in terms of the inclusion of real options and its modification. Therefore, the various techniques used in financial analysis are considered, such as adjusted present value, risk-adjusted discount rate, modified reinvestment assumption and real net present value. The essence is to arrive at a more realistic evaluation of various circumstances and potential external shocks in modern business conditions, in order to ensure the most adequate financial and investment decision-making in the future business of the company.

• Details
• Contents