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Analytical Hierarchy Process as a Tool for Investment Appraisal

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  • Ceren Oral

Abstract

Analytic Hierarchy Process (AHP), is the method of multiple-criteria decision analysis. AHP; severity of the important criteria in deciding the pairwise comparisons and it carries out the sequence of decisions alternatives. AHP is a powerful and easy to understand method that allows combining qualitative and quantitative factors in the decision making process for groups and individuals. AHP in finance is a frequently used method especially financial performance appraisal, credit appraisal, the financial failure prediction, estimation of the exchange rate and the selection of projects. Evaluation and selection of projects is a difficult task before making investment decisions. In this context, it has been developed a case study to determine the best project by applying the AHP technique. For this purpose, considering four criteria, the best projects between options have been identified and evaluated by alternative four projects.

Suggested Citation

  • Ceren Oral, 2016. "Analytical Hierarchy Process as a Tool for Investment Appraisal," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(4), pages 306-311, April.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:4:p:306-311
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    References listed on IDEAS

    as
    1. Babic, Zoran & Plazibat, Neli, 1998. "Ranking of enterprises based on multicriterial analysis," International Journal of Production Economics, Elsevier, vol. 56(1), pages 29-35, September.
    2. Ülengin, F & Ülengin, B, 1994. "Forecasting foreign exchange rates: A comparative evaluation of AHP," Omega, Elsevier, vol. 22(5), pages 505-519, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Analytical Hierarchy Process (AHP); investment appraisal; decision making;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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