Use of Evolutionary Algorithm in the Investment Project Evaluation


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Durucasu H., Acar E.

Global Interdisciplinary Business-Economics Advancement Conference(GIBA), The International Interdisciplinary Business and Economics Conference: Volume 1, Florida, United States Of America, 15 - 18 May 2014, vol.12, pp.251-260

  • Publication Type: Conference Paper / Full Text
  • Volume: 12
  • Doi Number: 10.5038/2333-4207-v1
  • City: Florida
  • Country: United States Of America
  • Page Numbers: pp.251-260

Abstract

In the realization of infrastructure projects, the interest shown in the Build-Operate-Transfer (BOT) model is on the increase. Through the BOT projects, the risks and awards of the public in the realization of infrastructure projects are transferred to the private sector. Implementing the BOT projects successfully depends on the ability to constitute a structure which enhances the possibility of the sponsors’ achievement in the BOT tender. The debt to equity ratio, the concession length and the price variables are the critical financial factors in BOT projects. Thus, these factors must be designed in the way that they will look out for the interests of the participants of the project. In this study, a new approach regarding the project finance has been put forth by optimally integrating the major financial factors that provide financial viability for the project. The optimization equation and constraints were developed on the basis of the discounted cash flow analysis which is among the dynamic methods, and the calculations were made by utilizing the real-coded Evolutionary Algorithm for the non-linear behaviour of the objective function. In this way, a more efficient and productive support is provided for the financial decision-making process.