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A Discounted Cash Flow variant to detect the optimal amount of additional burdens in Public-Private Partnership transactions

The Discounted Cash Flow method is a long since well-known tool to assess the feasibility of investment projects, as the background which shapes a broad range of techniques, from the Cost-Benefit Analysis up to the Life-Cycle Cost Analysis. Its rationale lies in the comparison of deferred values, on...

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Detalles Bibliográficos
Autor principal: Copiello, Sergio
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Elsevier 2016
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4804394/
https://www.ncbi.nlm.nih.gov/pubmed/27054095
http://dx.doi.org/10.1016/j.mex.2016.03.003
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author Copiello, Sergio
author_facet Copiello, Sergio
author_sort Copiello, Sergio
collection PubMed
description The Discounted Cash Flow method is a long since well-known tool to assess the feasibility of investment projects, as the background which shapes a broad range of techniques, from the Cost-Benefit Analysis up to the Life-Cycle Cost Analysis. Its rationale lies in the comparison of deferred values, only once they have been discounted back to the present. The DCF variant proposed here fits into a specific application field. It is well-suited to the evaluations required in order to structure equitable transactions under the umbrella of Public-Private Partnership. • The discount rate relies upon the concept of expected return on equity, instead than on those of weighted average cost of capital, although the latter is the most common reference within the scope of real estate investment valuation. • Given a feasible project, whose Net Present Value is more than satisfactory, we aim to identify the amount of the additional burdens that could be charged to the project, under the condition of keeping the same economically viable. • The DCF variant essentially deals with an optimization problem, which can be solved by means of simple one-shot equations, derived from financial mathematics, or through iterative calculations if additional constraints must be considered.
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spelling pubmed-48043942016-04-06 A Discounted Cash Flow variant to detect the optimal amount of additional burdens in Public-Private Partnership transactions Copiello, Sergio MethodsX Social Science The Discounted Cash Flow method is a long since well-known tool to assess the feasibility of investment projects, as the background which shapes a broad range of techniques, from the Cost-Benefit Analysis up to the Life-Cycle Cost Analysis. Its rationale lies in the comparison of deferred values, only once they have been discounted back to the present. The DCF variant proposed here fits into a specific application field. It is well-suited to the evaluations required in order to structure equitable transactions under the umbrella of Public-Private Partnership. • The discount rate relies upon the concept of expected return on equity, instead than on those of weighted average cost of capital, although the latter is the most common reference within the scope of real estate investment valuation. • Given a feasible project, whose Net Present Value is more than satisfactory, we aim to identify the amount of the additional burdens that could be charged to the project, under the condition of keeping the same economically viable. • The DCF variant essentially deals with an optimization problem, which can be solved by means of simple one-shot equations, derived from financial mathematics, or through iterative calculations if additional constraints must be considered. Elsevier 2016-03-11 /pmc/articles/PMC4804394/ /pubmed/27054095 http://dx.doi.org/10.1016/j.mex.2016.03.003 Text en © 2016 The Author http://creativecommons.org/licenses/by/4.0/ This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
spellingShingle Social Science
Copiello, Sergio
A Discounted Cash Flow variant to detect the optimal amount of additional burdens in Public-Private Partnership transactions
title A Discounted Cash Flow variant to detect the optimal amount of additional burdens in Public-Private Partnership transactions
title_full A Discounted Cash Flow variant to detect the optimal amount of additional burdens in Public-Private Partnership transactions
title_fullStr A Discounted Cash Flow variant to detect the optimal amount of additional burdens in Public-Private Partnership transactions
title_full_unstemmed A Discounted Cash Flow variant to detect the optimal amount of additional burdens in Public-Private Partnership transactions
title_short A Discounted Cash Flow variant to detect the optimal amount of additional burdens in Public-Private Partnership transactions
title_sort discounted cash flow variant to detect the optimal amount of additional burdens in public-private partnership transactions
topic Social Science
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4804394/
https://www.ncbi.nlm.nih.gov/pubmed/27054095
http://dx.doi.org/10.1016/j.mex.2016.03.003
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