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A Further Note on Unrecovered Investment, Uniqueness of the Internal Rate, and the Question of Project Acceptability

Published online by Cambridge University Press:  06 April 2009

Richard H. Bernhard  and
Carl J. Norstrøm
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Extract

In a recent issue of the Journal of Financial and Quantitative Analysis, Bernhard [2] has pointed out and discussed the seemingly paradoxical possibility that P < 0 even though there is a unique r in the [0, ∞) interval, and that r > it for all t. He showed that this can happen when there are one or more additional values of r in the (−1, 0) interval or when the unique r in the [0, ∞) interval consists of multiple coinciding roots. The further point to be shown here is that it can also happen even when r is unique and simple in the (−1, ∞) interval. Thus the phenomenon is considerably more general than Bernhard had implied.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 15 , Issue 2 , June 1980 , pp. 421 - 423
Copyright
Copyright © School of Business Administration, University of Washington 1980

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References

REFERENCES

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