On the Theory of Optimal Investment Decision

@article{Hirshleifer1958OnTT,
  title={On the Theory of Optimal Investment Decision},
  author={Jack Hirshleifer},
  journal={Journal of Political Economy},
  year={1958},
  volume={66},
  pages={329 - 352}
}
  • J. Hirshleifer
  • Published 1 August 1958
  • Economics
  • Journal of Political Economy
This article is an attempt to solve (in the theoretical sense), through the use of isoquant analysis, the problem of optimal investment decisions (in business parlance, the problem of capital budgeting). The initial section reviews the principles laid down in Irving Fisher's justly famous works on interest to see what light they shed on two competing rules of behavior currently proposed by economists to guide business investment decisions - the present-value rule and the internal-rate-of return… 

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