Average Rate of Return With Uncertainty
In Greco S. Bouchon-Meunier B, Coletti G, Fedrizzi M, Matarazzo B, Yager RR (Eds). Advances in Computational Intelligence, 14th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems (IPMU 2012), Catania, July 9-13.
10 Pages Posted: 23 Mar 2021
Date Written: March 2, 2021
In this paper we introduce uncertainty in the investment appraisal, managed through a new criterion called Average Internal Rate of Return (AIRR), introduced in Magni (2010). The consistency of the arithmetic of variables represented with intervals or fuzzy numbers makes it possible to apply the extension principle whereby a rigorous analysis of the investment decisions under uncertainty is accomplished.
Keywords: investment decisions, interval arithmetic, fuzzy numbers, extension principle
JEL Classification: C02, C44, G31
Suggested Citation: Suggested Citation