A Survey of Discounting Theory and Its Applications in the Private and Public Sectors.
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF ENGINEERING
Pagination or Media Count:
Discounting provides a means of comparing the cash flows of investment proposals on the basis of present value. In the private sector discounting is applied in a straight forward manner. The interest rate used is the firms cost of capital. In the public sector discounting should be applied when it is reasonable to do so. The interest rate should be derived from the rats of return that could have been earned in the private sector had the funds been left there. Social costs should be considered as real investment costs. Equal effectiveness assumptions should be carefully examined. Author
- Economics and Cost Analysis
- Operations Research