Capital Budgeting with Fuzzy Net Present Value Criterion

This paper proposes a more appropriate tool of incorporating uncertainties and investor´s attitude to risks into capital budgeting analysis. It has extended the classical net present value (NPV) method by developing a fuzzy logic system that takes the vague future cash flow and required rate of return into account. In order to explicitly discuss the more appropriate NPV method, the uncertain information will be fuzzified as triangular fuzzy numbers so that it would be more useful and practical for financial manager to analyze the capital budget of firms. We find that the fuzzy net present value (FNPV) method is one extension of the classical (crisp) cases.