DETERMINING FIRM-SPECIFIC VALUES FOR RISKY INVESTMENTS

Joseph A. Atwood

Western Journal of Agricultural Economics, 1990, vol. 15, issue 2, 8

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.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:ags:wjagec:32067

DOI: 10.22004/ag.econ.32067

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