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The Valuation of a Firm With Alternative Projects

The Valuation of a Firm With Alternative Projects
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Author(s): Cem Berk (Kirklareli University, Turkey)and Mustafa Dilmen (Infratech Industrial Heating Systems, Turkey)
Copyright: 2020
Pages: 15
Source title: Valuation Challenges and Solutions in Contemporary Businesses
Source Author(s)/Editor(s): Sinem Derindere Köseoğlu (Independent Researcher, Turkey)
DOI: 10.4018/978-1-7998-1086-5.ch014

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Abstract

The value of a firm is equal to the value of all projects in its assets. Investment decision is taken based on expected costs, knowledge of techniques, and risk perception; all of which are parameters of firm valuation. The research in this chapter is based on a real company in the household appliance industry. The company has a factory storage in Istanbul, Turkey. Two alterative heating projects (infrared and natural gas) are developed for the storage space according to project characteristics and heating requirements. The initial investments and operating costs are determined by market prices. According to the results, electric infrared heating is most of the time more favorable when the ceiling is high. An investment decision specifically for the factory storage is made. A discussion section on results is also available. Heating and cooling is a strategic industry for European Commission. The research can guide academicians and practitioners in this field.

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