Project valuation refers to the analysis of the investment projects in order to determine the benefits and costs of the investments. With regard to this, the analysis aims to decide which projects to choose and to determine whether an investment project will be implemented or not. That is to say, the project valuation is a detailed study that includes investigating and evaluating whether any investment is practically applicable. The study mainly covers research and evaluations on market, technical and financial issues. Moreover, in general terms project valuation is a comprehensive process that detects the price of anything. This process could contain the worth determination of various assets from stocks, options, and mutual funds to patents, trademarks, and properties. Before launching any investment the entrepreneurs assess and analyze different factors such as project environment, cash flows, profitability, risks, technical solutions, regional and social effects, and other necessary information according to the scope of the project in order to be able to determine the worth of it.
Published in Chapter:
Valuation of Logistics Hubs: A Case Study From Turkey
Musa Gün (Recep Tayyip Erdogan University, Turkey)
Copyright: © 2020
|Pages: 28
DOI: 10.4018/978-1-7998-1086-5.ch015
Abstract
Logistics structures playing significant roles in the economic development of countries are irreversible investments. The exact valuation of them could be difficult due to various uncertainties and problems. This chapter illustrates a methodological way to be able to make an investment decision about the creation of a logistics hub in Of-Iyidere region. Under given assumptions, the study findings indicate that (1) the investment has a positive net present value under three different cost of capital rates, which are 7.5%, 10%, and 15%; (2) the internal rate of return is 18.5%; (3) the payback period is 7 years 8 months; and (4) the discounted payback periods are calculated as 10 years 1 month, 11 years 3 months, and 14 years 11 months according to the aforementioned cost of capital rates. Moreover, the chapter discusses basic project valuation challenges and presents solutions to improve the practice of logistics hub appraisal. So, the paper exhibits an essential guidance and policy support tool to highlight the potential of logistics hub infrastructures in Turkey.