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Some New Capital Budgeting Theorems: Comment

Published online by Cambridge University Press:  06 April 2009

Richard H. Bernhard
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Extract

In this issue of the Journal of Financial and Quantitative Analysis, Beranek [2] has presented a clever but cumbersome analysis showing that, for a simple multiperiod situation, computing a project's net present worth by discounting its cash flows at particular “costs of capital” and accepting the project if that net present worth is positive is completely consistent with raising the net present wealth of stockholders, initial investment from whom provides partial funding for the project.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 13 , Issue 5 , December 1978 , pp. 825 - 829
Copyright
Copyright © School of Business Administration, University of Washington 1978

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References

REFERENCES

[1]Bailey, Martin J. “Formal Criteria for Investment Decisions.” Journal of Political Economy, Vol. 67, No. 6 (10 1959), pp. 476–488.CrossRefGoogle Scholar
[2]Beranek, William. “Some New Capital Budgeting Theorems.” Journal of Financial and Quantitative Analysis, Vol. 13, No. 5 (12 1978).CrossRefGoogle Scholar
[3]Bernhard, Richard H. “A Comprehensive Comparison and Critique of Discounting Indices Proposed for Capital Investment Evaluation.” The Engineering Economist, Vol. 16, No. 3 (Spring 1971), pp. 157–186.CrossRefGoogle Scholar