search query: @indexterm NET PRESENT VALUE / total: 71
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| Author: | Sharp, J. A. |
| Title: | Capital investment - An optimal control perspective |
| Journal: | Journal of the Operational Research Society
1990 : NOV, VOL. 41:11,p. 1053-1063 |
| Index terms: | CAPITAL INVESTMENT DECISION MAKING CONTROL MODELS NET PRESENT VALUE CASH FLOW PROJECTS OPTIMIZATION |
| Language: | eng |
| Abstract: | The paper attempts to identify some of the characteristics of a mental model of how investment decisions should be carried out. An optimal control model of the process of authorizing an investment project was constructed. The key activities in the model are design, support generation and authorization. It is assumed that effort that can be expended on each is limited. The objective function is the net present value of cash flows associated with the project. For viable projects, four different patterns of decision-making are found, each of which is optimum under appropriate circumstances. In many actual investment decisions it should be possible for managers to approximate closely the optimal behaviour. |
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