| In general, most capital budgeting problems deal with future and often uncertain data. To cope with this uncertainty, fuzzy sets theory has been applied to traditional deterministic approaches by replacing uncertain data with fuzzy numbers. In this research, the total cash flow model is investigated as a basic model. Components or variables in the model such as initial investment, annual income, annual cost and depreciation amount have been assumed to be interesting uncertain data. Discussion of these variables in the total cash flow model has been presented and a fuzzy total cash flow model has been proposed. Examples of fuzzy cash flows and fuzzy resultant net present values (NPV) are computed from the model. A sensitivity analysis is performed to show a relationship between percentage of fuzziness of components in the fuzzy total cash flow model to percentage of fuzziness of resultant net present value. Finally, fuzzy single project evaluation techniques are extended to mutually exclusive projects selection criteria. Numerical examples are included in each section for demonstration. |
