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The Choice of Technique with Multiple and Complex Interest Rates

19 Pages Posted: 16 Nov 2016  

Robert L. Vienneau

Independent

Date Written: November 14, 2016

Abstract

This paper clarifies the relationships between Internal Rates of Return, Net Present Value, and the analysis of the choice of technique in models of production analyzed during the Cambridge capital controversy. Multiple and possibly complex roots of polynomial equations defining the IRR are considered. An algorithm, using these multiple roots to calculate the NPV, justifies the traditional analysis of a reswitching example.

Keywords: Net Present Value, Internal Rate of Return, Choice of technique, reswitching

JEL Classification: B4, C63, D24, E43, G11, G31

Suggested Citation

Vienneau, Robert L., The Choice of Technique with Multiple and Complex Interest Rates (November 14, 2016). Available at SSRN: https://ssrn.com/abstract=2869058 or http://dx.doi.org/10.2139/ssrn.2869058

Robert L. Vienneau (Contact Author)

Independent ( email )

209 Maple Street
Rome, NY 13440
315-336-5417 (Phone)
315-334-4964 (Fax)

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