Using Fuzzy Set Theory to Analyse Investments and Select Portfolios of Tangible Investments in Uncertain Environments

This paper shows how Fuzzy Set Theory can be used in investment analysis when, as usual, these investments are developed under uncertainty, i.e. the investor has only subjective estimates based on his experience or knowledge about the future cash-flows of the investments, the discount rate, etc. In particular, we will develop basic concepts for investment analysis as the Net Present Value and the Internal Rate of Return by assuming that the initial data are fuzzy numbers. Later we will analyse how to rank investments and how to select the tangible investment portfolios when the magnitudes are estimated subjectively by comparing fuzzy numbers and with possibilistic mathematical programming.