1988 | OriginalPaper | Buchkapitel
A Dynamic Investment Rule for an Irreversible Project
verfasst von : Werner Jammernegg
Erschienen in: DGOR/NSOR
Verlag: Springer Berlin Heidelberg
Enthalten in: Professional Book Archive
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We deal with the question whether to invest in an already selected project, e.g. a productive asset like a machine. Assuming that the investment projects of a firm are economically independent and indivisible, the answer of the previous question reduces to the application of the net-present-value-rule. But this is only correct if the considered project is a short-lived one. If the investment project is at least irreversible in the short run, the question when to invest becomes important too. For this type of project the optimal investment decision must be investigated in a dynamic framework.