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Article
Publication date: 1 March 1989

Nanda Nanthakumaran

Examines the problem of multiple solutions in relation to the useof the internal rates of return (IRR) as a decision‐making criterion.Attempts to show that positive multiple IRRs…

Abstract

Examines the problem of multiple solutions in relation to the use of the internal rates of return (IRR) as a decision‐making criterion. Attempts to show that positive multiple IRRs occur only in a limited number of cases and in such cases the IRR is not the appropriate measure of return. Argues instead that the true rate of return for such projects is shown to be dependent on the cost of capital. Suggests two methods to deal with this problem: the extended yield method and the return on invested capital method.

Details

Journal of Valuation, vol. 7 no. 3
Type: Research Article
ISSN: 0263-7480

Keywords

Article
Publication date: 6 December 2019

Shijing Liu, Hongyu Jin, Chunlu Liu, Benzheng Xie and Anthony Mills

The purpose of this paper is to examine public–private partnership (PPP) approaches for the construction of rental retirement villages in Australia and to allocate the investment…

Abstract

Purpose

The purpose of this paper is to examine public–private partnership (PPP) approaches for the construction of rental retirement villages in Australia and to allocate the investment proportions under a certain project return rate among three investors which are the government, private sectors and pension funds. The apportionment will achieve a minimum overall investment risk for the project.

Design/methodology/approach

Capital structure, particularly determination of investment apportionment proportions, is one of the key factors affecting the success of PPP rental retirement villages. Markowitz mean-variance model was applied to examine the investment allocations with minimum project investment risks under a certain projected return rate among the PPP partners for the construction of rental retirement villages.

Findings

The research findings validate the feasibility of the inclusion of pension funds in the construction of PPP rental retirement villages and demonstrate the existence of relationships between the project return rate and the investment allocation proportions.

Originality/value

This paper provides a quantitative approach for determination of the investment proportions among PPP partners to enrich the theory of PPP in relation to the construction of rental retirement villages. This has implications for PPP partners and can help these stakeholders make vital contributions in developing intellectual wealth in the PPP investment area while providing them with a detailed guide to decision making and negotiation in relation to investment in PPP rental retirement villages.

Details

Built Environment Project and Asset Management, vol. 10 no. 1
Type: Research Article
ISSN: 2044-124X

Keywords

Article
Publication date: 1 January 1972

Ordell Calkins and Mohammad Sangeladji

Use of the internal rate of return (IRR) and the net present value (NPV) techniques in evaluating capital investments has been advocated by many financial writers. They almost…

Abstract

Use of the internal rate of return (IRR) and the net present value (NPV) techniques in evaluating capital investments has been advocated by many financial writers. They almost always assert that these methods are superior to the more widely used payback and accounting rate of return techniques. The usual reason given centres around the concept of the time value of money, a factor that is absent in the latter method. Without doubt there is merit in this reasoning.

Details

Management Decision, vol. 10 no. 1
Type: Research Article
ISSN: 0025-1747

Article
Publication date: 29 March 2019

Nick French

The purpose of this paper is to comment upon the relatively straightforward but often misunderstood role of gearing (or leverage) on the potential equity return of a property…

Abstract

Purpose

The purpose of this paper is to comment upon the relatively straightforward but often misunderstood role of gearing (or leverage) on the potential equity return of a property investment.

Design/methodology/approach

This education briefing is an explanation of the upside and downside risk of borrowing (at different levels) to successful investment.

Findings

The use of gearing can greatly enhance equity returns but at an increased risk.

Practical implications

The process of borrowing at a bank rate below the return rate on an investment project can increase the equity return of the project as long as all incomes and discount rate remain at appropriate levels.

Originality/value

This is a review of existing models.

Details

Journal of Property Investment & Finance, vol. 37 no. 3
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 5 September 2016

Michael Patrick and Nick French

The purpose of this paper is to discuss the use of the internal rate of return (IRR) as a principal measure of performance of investments and to highlight some of the weaknesses of

6565

Abstract

Purpose

The purpose of this paper is to discuss the use of the internal rate of return (IRR) as a principal measure of performance of investments and to highlight some of the weaknesses of the IRR in evaluating investments in this way.

Design/methodology/approach

This Education Briefing is an overview of the limitations of the IRR in making capital budgeting decisions. It is illustrated with a number of counter-intuitive examples.

Findings

The advantage of the IRR is that it is, on the surface, a wonderfully simple benchmark. One figure that tells a story. But, the disadvantage is that if used in isolation the IRR can give misleading results when used to assess investment proposals.

Practical implications

The IRR should be used in conjunction with other analyses to appraise projects, so that the user can determine its veracity in the context of other benchmarks. This context is particularly important when assessing investments with unusual cash flows.

Originality/value

This is a review of existing models.

Details

Journal of Property Investment & Finance, vol. 34 no. 6
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 29 March 2019

Vladimir Michaletz and Andrey I. Artemenkov

The purpose of this paper is to present a methodology based on the transactional asset pricing approach (TAPA) and to illustrate the application of TAPA within the context of

Abstract

Purpose

The purpose of this paper is to present a methodology based on the transactional asset pricing approach (TAPA) and to illustrate the application of TAPA within the context of professional property valuation.

Design/methodology/approach

The TAPA is a novel analytical valuation methodology recasting the traditional derivations of the income approach techniques, including DCF, from a transactional perspective based on the principle of inter-temporal transactional equity, instead of the conventional investor-specific view originating from I. Fisher (1907, 1930).

Findings

The authors present DCF analysis as a specific case of a more general TAPA approach to valuation under the income method. This also leads to novel analytical derivations of the Direct income capitalization, Gordon, Inwood, Hoskold and Ring models. Based on the TAPA framework, the authors also research the value-enhancing effects of benchmark market volatility on the subject property value and conclude that such effects can be statistically significant depending on the DCF analysis period.

Research limitations/implications

The research has a direct bearing on time-variable discount rate forecasting capabilities, as it uses a time-variant structure for the discount rates.

Practical implications

Using the US Case-Shiller and BLS rental indices as a valuation benchmark, the paper contains an example of applying the general TAPA framework to value a notional property under a TAPA’s DCF version. Such property valuations can be easily replicated in practice – especially in the context of equitable/fair value determination under the International Valuation Standards Council valuation standards.

Social implications

TAPA is a deductive principles-based theory of asset valuation especially fit for the transactional and illiquid asset valuation contexts – thus enabling a more efficient pricing for such assets in a sense of reflecting the transactional interests of the parties more closely than achievable under the conventional valuation methods.

Originality/value

TAPA is an original filiation of research with roots going as far back as Aristotelian Catallactics. It contains analytical formalizations of certain transactional equity principles.

Details

Journal of Property Investment & Finance, vol. 37 no. 3
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 8 November 2011

James W. Julian and Clark F. Seavert

The purpose of this paper is to present AgProfit™ as a tool for users to assess economic risks associated with adoption of new technologies or production practices in production…

Abstract

Purpose

The purpose of this paper is to present AgProfit™ as a tool for users to assess economic risks associated with adoption of new technologies or production practices in production agriculture.

Design/methodology/approach

This paper presents the AgProfit™ software program, its approach to capital investment analysis and demonstrates the program use by developing a scenario for analysis and discusses the process and results of the analysis.

Findings

AgProfit™ was developed to assist growers in understanding the risks associated with technology adoption. The example presented in this paper demonstrates the value of the software program as a decision‐making tool on the complex question of how many acres are required for an economically beneficial adoption of a new technology. Thus, with this software program, a grower can base investment decisions on the net present value and internal rates of return on an investment rather than a sales pitch or “gut” feeling.

Originality/value

AgProfit™ is a recently developed software program that fills a void in available decision tools, providing users with the ability to assess the profitability and feasibility of production investment decisions.

Article
Publication date: 1 March 1995

Louis A. Tucci and James J. Tucker

Builds on the efforts of an earlier study to enhance marketers′ability to evaluate earnings performance accurately by first presentinghands‐on illustrative examples of two…

1743

Abstract

Builds on the efforts of an earlier study to enhance marketers′ ability to evaluate earnings performance accurately by first presenting hands‐on illustrative examples of two approaches to adjusting the income statement for earnings shocks and estimating the earnings of core operations. Examines the impact on marketing managers of the “fallout” that may result from changes in management policies which are prompted by the perceptions of poor earnings performance. This fallout includes: challenges by upper management regarding the wisdom and effectiveness of the marketing strategy; marketers′ reduced ability to execute the marketing plan owing to cost‐cutting campaigns that result in reduced marketing expenditures (e.g. advertising and sales promotion expenditures); and higher projected rates of return (i.e. higher “hurdle rates”) required for investment proposals before they are considered acceptable. Concludes with the presentation of strategies which may be employed by marketers to respond to and negotiate with upper management when policy changes designed to cut operating and investment expenditures constrain marketers′ ability to execute marketing strategy aggressively and effectively.

Details

Journal of Consumer Marketing, vol. 12 no. 1
Type: Research Article
ISSN: 0736-3761

Keywords

Article
Publication date: 6 November 2023

Nathan Garrett

The purpose of this study was to investigate how pension funds use charts in popular reports. Popular reports communicate a fund’s financial health to non-technical audiences, and…

Abstract

Purpose

The purpose of this study was to investigate how pension funds use charts in popular reports. Popular reports communicate a fund’s financial health to non-technical audiences, and often contain charts, tables, and other graphical elements. Do these graphics meet audiences’ information needs and align with chart best practices?

Design/methodology/approach

This study focused on the 60 retirement funds receiving a 2021 popular report award from the Government Finance Officers Association. The author analyzed each graphic’s topic and design.

Findings

Most funds presented key topics (such as funding rate and portfolio return), but they generally lacked helpful benchmarks or peer comparisons. A total of 30% of reports had one or more broken charts, where their visual elements did not match the underlying data. A total of 70% of the reports contained at least one badly designed chart. These design flaws included non-zero (truncated) axes, hidden non-zero axes and misleading 3D perspectives.

Originality/value

To the best of the authors’ knowledge, this paper is the first to examine chart quality in pension fund popular reports.

Details

Transforming Government: People, Process and Policy, vol. 18 no. 1
Type: Research Article
ISSN: 1750-6166

Keywords

Article
Publication date: 1 January 1981

This register of current research in social economics has been compiled by the International Institute of Social Economics. The register does not claim to be comprehensive but is…

Abstract

This register of current research in social economics has been compiled by the International Institute of Social Economics. The register does not claim to be comprehensive but is merely an aid for research workers and institutions interested in social economics. The register will be updated and made more comprehensive in the future but this is largely dependent on the inflow of information from researchers in social economics. In order to facilitate this process a standardised form is to be found on the last page of this register. Completed forms, with attached sheets as necessary, should be returned to the compiler: Dr Barrie O. Pettman, Director, International Institute of Social Economics, Enholmes Hall, Patrington, Hull, N. Humberside, England, HU12 OPR. Any other comments on the register will also be welcome.

Details

International Journal of Social Economics, vol. 8 no. 1
Type: Research Article
ISSN: 0306-8293

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