An examination of the discount rate
Loading...
Date
2005
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
FONDO CULTURA ECONOMICA
Abstract
The choice of an appropriate discount rate is of major importance in cost-benefit analysis both, at the private and at the social levels. The theories that rationalize. the NPV criterion also identify the appropriate rate. However, the question remains as to what should be done when the environment where the project is under appraisal does not accommodate well to the one described by the theory. This essay puts forward the idea that generally speaking, when there is no obvious rate to pick the NPV criterion lacks normative value.
Description
Keywords
COST-BENEFIT-ANALYSIS, EQUILIBRIUM, INVESTMENT, MARKET, RISK