DETERMINING FIRM-SPECIFIC VALUES FOR RISKY INVESTMENTS

This article demonstrates that the usefulness of time-state contingent investment evaluation models need not be constrained by limited time-state contingent markets. Dual solutions to stochastic programs can be used to obtain firm-specific values for risky investments while allowing linear dependence between initial values and later time-state contingent income-technical coefficients. The model could be useful when the exogenous a priori determination of appropriate (and project-specific) risk-adjusted discount rates and/or certainty equivalents is difficult or when the cash equivalents of noncash investment effects are difficult to estimate.


Issue Date:
1990-12
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/32067
Published in:
Western Journal of Agricultural Economics, Volume 15, Number 2
Page range:
196-203
Total Pages:
8




 Record created 2017-04-01, last modified 2017-08-24

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