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Evaluating Negative Benefits

Published online by Cambridge University Press:  06 April 2009

William L. Beedles
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Extract

Evaluating investments by discounting anticipated future benefits at an exogenously determined risk-adjusted discount rate (hereafter referred to as the RADR approach) is well accepted in the canon of finance. If benefits (Dt) are to be received for T periods and if k, the discount rate, is constant over each of the t periods, then the discrete time net present value (NPV) is defined as:

A positive NPV characterizes a desirable investment.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 13 , Issue 1 , March 1978 , pp. 173 - 176
Copyright
Copyright © School of Business Administration, University of Washington 1978

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References

REFERENCES

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