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A Neo-Austrian Perspective on the Value of Growth Prospects

Andrea Mantovi () and Augusto Schianchi ()
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Augusto Schianchi: Dipartimento di Economia, Università di Parma, Italy

Working Paper series from Rimini Centre for Economic Analysis

Abstract: The valuation framework inherent t the neo-Austrian theory of capital set forth by Hick’s (1973) is discussed in terms of a fundamental formula which disentangles the profitability associated with the scale of operation from the internal rate of return of the production process. The formula is employed to tailor a perspective on the value of investment prospects, meant to complement the insights embodied by Tobin’s q metric. Balance sheet recessions are briefly discussed as a cogent line of application of four formula. Potential lines of progress are envisioned.

Date: 2015-11
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