Open AccessA FUZZY PAY-OFF METHOD FOR REAL OPTION VALUATION IN DETERMINATION OF MINING ENTERPRISE VALUE
Author(s) -
Marian Turek,
Adam Sojda
Publication year - 2014
Publication title -
computing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.184
H-Index - 11
eISSN - 2312-5381
pISSN - 1727-6209
DOI - 10.47839/ijc.13.4.640
Subject(s) - discounted cash flow , valuation (finance) , fuzzy logic , cash flow , value (mathematics) , basis (linear algebra) , computer science , fuzzy number , defuzzification , fuzzy set , econometrics , data mining , mathematical optimization , operations research , mathematics , economics , finance , artificial intelligence , machine learning , geometry
The article presents the use of real options in determination of mining enterprise value. The value estimation is based on discounted cash flow method. The adoption of fuzzy numbers allows introducing a risk aspect to the known method of determination of enterprise value. A classic discounted cash flow method uses one scenario on the basis of which one value is determined. The method presented is grounded on three scenarios: optimistic, the most probable, pessimistic. On this basis the values defining a fuzzy number are indicated. Algorithm of this defuzzification, based on the idea of real options enables indicating a concrete value.