China
Africa
Explore chapters and articles related to this topic
Economics of Additive Manufacturing
Published in Linkan Bian, Nima Shamsaei, John M. Usher, Laser-Based Additive Manufacturing of Metal Parts, 2017
The adjusted internal rate of return (AIRR) is the annual yield from a project over the study period, taking into account reinvestment of interim receipts. Because the AIRR calculation explicitly includes the reinvestment of all net cash flows, it is instructive to introduce a new term, terminal value (TV). The terminal value of an investment, a∗, is the future value (i.e., the value at the end of the study period) of reinvested net cash flows excluding all investment costs. The terminal value for an investment a∗, is denoted as TVa*.
Estimating the implied risk premium of U.S.-listed shipping firms
Published in Maritime Policy & Management, 2018
The empirical estimation of ICC requires reliable proxies of expected cash flows up to the horizon, a terminal value under appropriate growth assumptions, and a valuation model which links intrinsic values to market prices. Following the extant literature of ICC, we employ variants of the residual income model (RIV) and the abnormal growth model (AEG). These models are isomorphic to the dividend discount model, but they express equity value in terms of accounting numbers, of which earnings’ forecasts are central. This facilitates the estimation of ICC under informational input that is both richer and more readily available (i.e. does not exclude non-dividend paying firms). We use these models to initially calculate annual, ‘once a year,’ ICC estimates. We thereon use the Daske (2006) methodology to extend the time-series of ICC by calculating annual estimates at each month of every year. The valuation models and their corresponding implementation assumptions are outlined below.