Show simple item record

Ranking Investment Projects

dc.contributor.authorFoster, James E.
dc.contributor.authorMitra, Tapan
dc.description.abstractThis paper describes conditions under which one investment project dominates a second project in terms of net present value, irrespective of the choice of the discount rate. The resulting partial ordering of projects has certain similarities to stochastic dominance. However, the structure of the net present value function leads to characterizations that are quite specific to this context. Our theorems use Bernstein's (1915) innovative results on the representation and approximation of polynomials, as well as other general results from the theory of equations, to characterize the partial ordering. We also show how the ranking is altered when the range of discount rates is limited or the rate varies period by period.
dc.publisherVanderbilt Universityen
dc.subjectJEL Classification: D92, G31, H043, O22
dc.subjectinvestment projects
dc.subjectpresent value
dc.subjectstochastic dominance
dc.subjectrate of return over cost
dc.subjecttime dominance
dc.titleRanking Investment Projects
dc.typeWorking Paperen

Files in this item


This item appears in the following Collection(s)

Show simple item record