Journal of Finance
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A Comparative Analysis of the Net Present Value and the Benefit-Cost Ratio as Measures of the Economic Desirability of Investments [статья]
Опубликовано на портале: 17-09-2004Bernhard Schwab, Peter Lusztig Journal of Finance. 1969. Vol. 24. No. 3. P. 507-516.
Recent contributors in managerial finance have very largely been concerned with the more challenging of valuation and capital structure. As a consequence, several controversial but less provoking issues remain shelved and unresolved. This paper is essentially directed at one such issue - the merits of alternative criteria for measuring the economic desirability of investments (both individual investment propositions and aggregate investment portfolios), in particular the net present value on the one hand and various benefit-cost ratios on the other. While these various measures are based on the same fundamental concept - recognizing the time value of money - and are, therefore, related to each other, they are different enough to yield contradictory results in a number of situations. It is the purpose of this article to analyze systematically these various measures of economic desirability, defining the conditions under which they yield equivalent results and the conditions under which their results are contradictory, and, as a consequence, to determine the validity of their application to the economic evaluation of investments.