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Comment: Evaluating Negative Benefits

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  • Miles, James
  • Choi, Dosoung

Abstract

In a recent article [1], Beedles suggests that the valuation process for cash outflows (or negative benefits using his terminology) is, in some sense, different from the valuation process for cash inflows. This result, however, is not consistent with the assumption of perfect capital markets. Any cash outflow from one firm represents a cash inflow to some other firm(s) or investor(s). Consequently, any difference in the valuation processes for cash outflows and cash inflows will create profitable arbitrage possibilities.

Suggested Citation

  • Miles, James & Choi, Dosoung, 1979. "Comment: Evaluating Negative Benefits," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 14(5), pages 1095-1099, December.
    • Handle: RePEc:cup:jfinqa:v:14:y:1979:i:05:p:1095-1099_00
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    Cited by:

    1. Vojtěch Menzl, 2019. "Estimating Present Value of Expected Expenditures in the Context of the Valuation of Negative Risk Cash Flows Using the RADR and Certainty Equivalent Methods [Odhad současné hodnoty očekávaných výd," Oceňování, Prague University of Economics and Business, vol. 12(2), pages 29-48.
    2. Andrey Leonidov & Ilya Tipunin & Ekaterina Serebryannikova, 2020. "On Evaluation of Risky Investment Projects. Investment Certainty Equivalence," Papers 2005.12173, arXiv.org.

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