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Determining Firm-Specific Values For Risky Investments

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  • Atwood, Joseph A.

Abstract

This article demonstrates that the usefulness of time-state contingent investment evaluation models need not be constrained by limited time-state contingent markets. Dual solutions to stochastic programs can be used to obtain firm-specific values for risky investments while allowing linear dependence between initial values and later time-state contingent income-technical coefficients. The model could be useful when the exogenous a priori determination of appropriate (and project-specific) risk-adjusted discount rates and/or certainty equivalents is difficult or when the cash equivalents of noncash investment effects are difficult to estimate.

Suggested Citation

  • Atwood, Joseph A., 1990. "Determining Firm-Specific Values For Risky Investments," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(2), pages 1-8, December.
    • Handle: RePEc:ags:wjagec:32067
    DOI: 10.22004/ag.econ.32067
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    1. Myles J. Watts & Larry J. Held & Glenn A. Helmers, 1984. "A Comparison of Target MOTAD to MOTAD," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 32(1), pages 175-186, March.
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    Keywords

    Risk and Uncertainty;

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