CRITERIA FOR INVESTMENT SELECTION.
Abstract
A scarce resource is to be periodically allocated among several investment opportunities each of which produces a payout of the same resource in future periods. Future payouts may be reinvested, the object being to maximize some measure of accumulated wealth. The maximum internal rate of return criterion and the mathematical programming approach to this problem are analyzed and under certain stability conditions are shown to agree. Under these conditions the optimal prices in the dual program must initially lie near a discount vector derived from the maximum internal rate of return which is the systems von-Neumann price vector. In this sense the maximum internal rate of return may be used as an interest rate to 'price out' the opportunities available on the planning horizon even though no external rate of interest is assumed. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Oct 27, 1967
- Accession Number
- AD0663194
Entities
People
- Alan J. Seelefreund
Organizations
- Stanford University