Business values performance evaluation

In the second step of the utihty model, the input values are evaluated. For this purpose the decision matrix is transformed into a consequence matrix. So the input values are transformed into the part-worth utilities. Thus the consequence matrix consists only of the part-worth utility values. In order to perform this transformation, the utility model assumes that the decision maker has a precise idea about the utility placing to criterion s characteristics. Based on his preferences, different transformation functions can be considered, linear, concave and convex. In case the decision maker has a clear preference in respect of utility allocation, as in the present case study, the use of the utility model is possible. However specifying the preferences for all criteria and related characteristics in industrial business is not always easy (Aven 2007). On this note when clear preferences cannot be worked out, application of the utility model is not reasonable. 

Discounted cash flow is one of the best ways to perform economic evaluations because it expresses a project s attractiveness as an equivalent interest rate and permits direct comparison to the cost of money. Discounted cash flow also recognizes the time value of money. See business. 

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