Investments viewed as growth processes

Date
1995
Authors
Doğrusöz, H.
Karabakal, N.
Advisor
Instructor
Source Title
Engineering Economist
Print ISSN
0013-791X
Electronic ISSN
Publisher
Taylor & Francis
Volume
41
Issue
1
Pages
1 - 25
Language
English
Type
Article
Journal Title
Journal ISSN
Volume Title
Abstract

For modeling investment decision situations, we present a mathematical basis that views the cash flow sequences as growth processes. We first emphasize the pedagogical value of the basic model by showing that all traditionally established measures of worth (profitability) as well as the compound interest formulas of financial mathematics can actually be derived from it by simple algebraic manipulations. Then, we argue that the traditional measures fail to recognize the particularities of certain decision situations and point out the need for developing tailor made measures for each specific problem. We demonstrate, using real life examples, our approach for developing new measures and, by incorporating decision variables, practical optimization models from this mathematical basis. © 1995 Taylor & Francis Group, LLC.

Course
Other identifiers
Book Title
Keywords
Algebra, Decision making, Decision theory, Finance, Mathematical models, Optimization, Cash flow, Financial analysis, Financial mathematics, Growth processes, Investments, Profitability, Economics
Citation
Published Version (Please cite this version)