Capital investment analysis model should reflect an investor's preference properly. In general, investors tend to prefer the alternative which have a lower mean and higher variance but large positive skewness and relatively lower chance of loss. However the representative two models, E-V model and E-S model, fail to reflect such investors' preference properly. This thesis is devised to incorporate such investors' preference into capital investment analysis model.
This thesis is composed of three parts. At first, the shortcomings of the existing models are investigated in such aspect. Second, new model is devised to overcome the shortcomings. Then, a numerical example is given to illustrate the implementation and to compare with the two existing models.
