Complex Approach to Assessment of Investment Attractiveness of Power Generating Company

Present approaches based on the qualitative analysis methods are not effective enough for a comprehensive evaluation of the investment attractiveness of the power generating company (PGC). It resolves the urgency of the complex deterministic method of accounting for aggregated risk. The article presents the diagnostics of power generating company risks' and the assessment of the actual aggregated risk as the integral indicator of investment attractiveness of the PGC. The proposed authors' approach to ranking the risk taking into account the level of hazard is based on the calculation of individual limits of risk states variation and risk relative value. The individual risk assessment is based on the Bayes method complemented by a two-step normalization to account for the specificity of PGC. The Merton - Vasicek method and basic principles of the economic capital theory are used in developing the method of the final evaluation of the PGC investment attractiveness. Research veracity is confirmed by the practical implementation. The research results are recommended for use in assessing the current level of the PGC investment attractiveness and development strategy of its increase.

Keywords

investments attractiveness; power generating company; risk; Bayes method; theory of economic capital; Merton - Vasicek method.

References

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