Economic Evaluation of Investments Through Probabilistic Model

Abstract

The system of investment implementation aims to ensure, through the choice of the best investment projects, the strategic objectives of the cycle through which the organization is going. We basically have two kinds of investments, sustaining investments and value investments.

The sustaining investments guarantee the operational continuity of the existing asset in its best conditions from the point of view of productivity and security of process / people. Value investments are aimed at leveraging the company's productivity by improving current processes or developing new processes.

For value-added investments also called "NPV Projects", Braskem was using the deterministic net present value to evaluate the attractiveness of the investment and to help business decision-making to invest in the best projects, since the available resource For investment is always lower than the company's demand.

The maturity of the process required more accurate calculations to aid decision making. It was identified as an adequate alternative the use of probabilistic NPV to select the best investment projects of type value, since this method considers the risk associated to each of the variables that compose the evaluation.

This decision provided benefits for the process, such as:

• Dissemination of knowledge in investment valuation for all teams involved in the process;
• Uniformity of the assumptions for calculating the attractiveness of investments, allowing the comparison between them;
• Increase of 1% in the average NAV of Braskem's value investments portfolio, in 2016 this value corresponds to US $ 2,967.37 thousand.