4 Special Problems in Time Value of Money Methods

24 Pages Posted: 14 Feb 2006 Last revised: 3 Mar 2013

See all articles by Ignacio Velez-Pareja

Ignacio Velez-Pareja

Grupo Consultor CAV Capital Advisory & Valuation

Date Written: February 10, 2006

Abstract

This is a course material 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.

In this chapter 4 we study some special problems that we find when using the methods studied in chapter 3. We introduce the idea of non constant discount rates, a method to solve the discrepancy among the methods studied in chapter 3. This method solves the problem of the inconsistency that sometimes is present when we use the NPV and the IRR.

Note: Downloadable document is in Spanish.

Keywords: Non constant discount rates, inequal time period, contradictions between NPV, IRR and R B/C

JEL Classification: G31

Suggested Citation

Velez-Pareja, Ignacio, 4 Special Problems in Time Value of Money Methods (February 10, 2006). Available at SSRN: https://ssrn.com/abstract=882866 or http://dx.doi.org/10.2139/ssrn.882866

Ignacio Velez-Pareja (Contact Author)

Grupo Consultor CAV Capital Advisory & Valuation ( email )

Ave Miramar # 18-93 Apt 6A
Cartagena
Colombia
+573112333074 (Phone)

HOME PAGE: http://cashflow88.com/decisiones/decisiones.html

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