Assessing the Impact of XML/EDI with Real Option Valuation

von Dr. Shermin Voshmgir

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[1.] Svr/Fragment 069 11 - Diskussion
Zuletzt bearbeitet: 2020-05-25 19:56:31 [[Benutzer:|]]
BauernOpfer, Copeland Weston 1992, Fragment, Gesichtet, SMWFragment, Schutzlevel sysop, Svr

Typus
BauernOpfer
Bearbeiter
SleepyHollow02
Gesichtet
Yes.png
Untersuchte Arbeit:
Seite: 69, Zeilen: 11-23, 101-104
Quelle: Copeland Weston 1992
Seite(n): 25, 26, Zeilen: 25: 32 ff.; 26: 10 ff.
Investment decision rules are usually referred to as capital budgeting techniques. According to Copeland and Weston (1992: 26) the best technique will possess the following essential property: It will maximize shareholder's wealth. This essential property can be broken down into separate criteria:

- All cash flows must be considered.

- The cash flows should be discounted at the opportunity cost of funds.

- The techniques should select from a set of mutually exclusive projects the one that maximizes shareholders wealth.

- Managers should be able to consider one project independently from all other (this is known as the value additivity principle).

These theories assume that capital markets are frictionless1 and that the stream of cash flows estimated without error, which is also referred to as “Investment under Certainty” (Copeland and Weston 1992: 25).


1 In a frictionless market (1) financial managers can separate investment decision [sic] from individual shareholder preferences, and (2) monitoring costs are zero, so that managers will maximize shareholder's wealth. All they need to know are cash flows and the required market rate of return for projects if [sic] equivalent risk (Copeland and Weston, 1992: 25).


Copeland, T.E. & Weston, J.F. 1988 [sic], Financial Theory and Corporate Policy, 3rd ed., Addison-Wesley, Reading, Massachusetts.

We assume, for the time being, that the stream of cash flows provided by a project can be estimated without error, and that the opportunity cost of funds provided to the firm (this is usually referred to as the cost of capital) is also known. We also assume that capital markets are frictionless, so that financial managers can separate investment decisions from individual shareholder preferences, and that monitoring costs are zero, so that managers will maximize shareholders' wealth. All that they need to know are cash flows and the required market rate of return for projects of equivalent risk.

[page 26]

Investment decision rules are usually referred to as capital budgeting techniques. The best technique will possess the following essential property: It will maximize shareholders' wealth. This essential property can be broken down into separate criteria:

• All cash flows should be considered.

• The cash flows should be discounted at the opportunity cost of funds.

• The technique should select from a set of mutually exclusive projects the one that maximizes shareholders' wealth.

• Managers should be able to consider one project independently from all others (this is known as the value-additivity principle).

Anmerkungen

The source is given in the text and in a footnote. Quotation marks are used for three words ("investment under certainty") which cannot be found in the source for the page referenced, but only on p. 78 in the caption for Figure 4.1.

Sichter
(SleepyHollow02) Schumann



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