Intuitionistic fuzzy risk adjusted discount rate and certainty equivalent methods for risky projects

Risk adjusted interest rate (RADR) method and certainty equivalent (CE) method are the two popular methods used under risky conditions in the investment analysis. However, it should not be forgotten that there may be a vagueness in the estimation of risk factors. In this study, novel RADR and CE methods are extended for use under uncertainty by using single valued intuitionistic fuzzy (IF) sets. All investment parameters are used as IF pa-rameters. High speed rail and nuclear power plant investments given in the study were analyzed with IF-RADR and IF-CE methods. This study constitutes an important resource on how to analyze investments under risk with other fuzzy sets extensions. Another important aspect of the study is that the paper determines IF numbers consciously instead of assigning random fuzzy numbers and letting them be applied, e.g., IF-RADR and IF-CE values are determined to express the same vagueness and impreciseness. The study also includes an IF sensi-tivity analysis for a nuclear power plant investment problem. It is concluded with discussions and future research suggestions.

Automated summary

Risk adjusted interest rate (RADR) method and certainty equivalent (CE) method are popular methods for investment analysis under risky conditions. This study extends novel RADR and CE methods for use under uncertainty by using single valued intuitionistic fuzzy (IF) sets. The study analyzes high speed rail and nuclear power plant investments using IF-RADR and IF-CE methods. This study provides important insights on analyzing investments under risk with fuzzy sets extensions. The study also includes an IF sensitivity analysis for a nuclear power plant investment problem. Overall, the study is rated 8 out of 10 for its importance.