Engineering Economy Special Problems in Investment Decision Methods (Slides)
INVESTMENT DECISION MAKING: FOR FIRM AND PROJECT VALUATION, Forthcoming
4 Pages Posted: 25 Jan 2011 Last revised: 27 Feb 2013
Date Written: January 24, 2011
This is a course material (slides in pdf format) from the book Investment Decision Making. For Firm and Project Valuation. The book is originally in Spanish and is untitled as Decisiones de inversión. Para la valoración financiera de proyectos y empresas.
Chapter Four includes the study of different problems when working with the typical methods for financial decision making. This includes non constant discount rates, uneven periods, and the solution of contradictions among methods: Net Present Value, Internal Rate of Return and Profitability Ratio or Benefit Cost Ratio. For solving the inconsistencies the Weighted Internal rate of Return and the expanded Benefit Cost Ratio are proposed.
Keywords: NPV, IRR, Cost-Benefit Ratio, Net Present Value, Weighted Internal Rate of Return, Expanded Benefit Cost Ratio
JEL Classification: G31
Suggested Citation: Suggested Citation