IDEAS home Printed from https://ideas.repec.org/a/cup/jfinqa/v15y1980i02p391-406_00.html
   My bibliography  Save this article

The AB Procedure and Capital Budgeting

Author

Listed:
  • Beranek, William

Abstract

In a recent paper the net present value (NPV) accept-reject decision rule, invoking the conventional definition of expected net cash flows of a finite, uneven character along with a weighted average cost of capital, was derived from the condition of shareholder wealth maximization (Beranek [2]). Since the entire textbook-NPV expression was established–its logical form, the content of its variables, and the implied specification of its parameters–this has served as a partial rescue of textbook approaches to capital budgeting, approaches which had heretofore rested on an intuitive basis. But attempts to rescue textbook treatments of mutually exclusive (ME) choices and capital rationing must fail. Explaining why they must fail, and developing what we shall denote as the AB alternative solution, is the object of this paper.

Suggested Citation

  • Beranek, William, 1980. "The AB Procedure and Capital Budgeting," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 15(2), pages 391-406, June.
    • Handle: RePEc:cup:jfinqa:v:15:y:1980:i:02:p:391-406_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0022109000006360/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bradford, Garnett L. & Miller, Stephen E., 1998. "An Analysis Of Alternative Net Present Value Capital Investment Decision Models," Working Papers 18804, Clemson University, Department of Agricultural and Applied Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jfinqa:v:15:y:1980:i:02:p:391-406_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/jfq .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.