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The Discount Rate Problem in Capital Rationing Situations: Reply

Published online by Cambridge University Press:  19 October 2009

Peter Lusztig  and
Bernhard Schwab
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Extract

In our earlier note, we drew attention to the problem of interdependency between the opportunity cost used as a discount rate in determining the net present values of the objective function and the optimal solution of a linear program. In expanding on our article, Lockett and Tompkins (L and T) rightly point to the need for an appropriate definition of opportunity costs.

Type
Communications
Information
Journal of Financial and Quantitative Analysis , Volume 5 , Issue 2 , June 1970 , pp. 261
Copyright
Copyright © School of Business Administration, University of Washington 1970

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