Skip to content

Ask the Tutor ACCA BT

investment decision

OOyindamola9y ago
Dear sir, what are the ways of incorporating effect risk and uncertainty on investment decision?
kengarrettkengarrettTutor9y ago#1
Two common approaches are 1 Weight the various outcomes from a project with the probabilities of occurrence. This produces an amount called the 'expected value'. Or 2 Reduce the value of future flows to take account of the difficulty in predicting them accurately. This technoque produces 'certainty equivalents'.
Sign into reply to this topic.