This paper proposes a fuzzy binomial valuation model to estimate leveraged firm value while\nconditioning its continuity or liquidation in cash flow generation after taxes to attend debt\npayments. It includes two triangular fuzzy variables. Thus, we incorporate ambiguity in the\nfirm valuation process characterized by uncertainty in projections of both growth and\nfinancial costs. Our proposed model is presented, developed, and exemplified through a case\nwhich results complement both the DCF (under the adjusted present value) and the traditional\nreal option binomial method. This occurs because, in one hand, DCF method assumes\ndecisions� irreversibility and operating firms� situation. On the other hand, traditional\nbinomial model weakens previous restrictions but does not incorporate ambiguous variables\nin the analysis. Hence, fuzzy logic applied to option models allows us to complement\nprobabilistic valuation approach working on a frame of possibilities.
Loading....