Risk and assessment of investment in new technology

Abstract

It is suggested that a quantitative analysis of the risks inherent in a specific project can be easily carried out using spread-sheet models. This is to be preferred to the application of a blanket hurdle rate, which is the usual procedure when IRR is used to assess the viability of an investment in new technology. The methodology suggested is applied to the analysis of a projected investment where a conventional machine shop and flexible machining system are the alternatives.