Some uses of S-shaped curves in economic appraisal

Abstract

The importance of S-shaped curves in business decision making is discussed and simple methods of fitting equations to such curves are presented. Original adaptations of the well known logistics and Gompertz curves are presented and it is shown by worked examples that the former can be used as an approximation to the cumulative normal distribution curve while the latter is suited to the cumulative probability curve of triangular distributions. The use of such curves in analysing a proposed business strategy and estimating the probability of achieving given values of net present value and discounted cash flow rate of return are illustrated by a major example. This shows that expensive computational equipment is not necessary in order to make numerate assessments of such business factors as profitability, working capital required, project life, risk assessment, etc.