Stochastic Variations of Commonly Used Discounted Cash Flow Formulae.
CASE WESTERN RESERVE UNIV CLEVELAND OHIO DEPT OF OPERATIONS RESEARCH
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Standard texts in Engineering Economy, Capital Allocation Theory, Finance, Managerial Economics andor Economic Analysis develop and list equations for various cases of discounted cash flow analysis. In these tests the independent variables andor parameters are assumed to be known deterministically. In practice, however, it is often difficult to establish values for these variables with certainty. Yet, it is often possible to establish for such values the distributions and its parameters. This paper lists the stochastic formulations for each of the commonly used equations for various combinations and permutations of distributions. Author
- Economics and Cost Analysis
- Operations Research