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CAPM and capital budgeting: present versus future, equilibrium versus disequilibrium, decision versus valuation

Magni, Carlo Alberto - Volkswirtschaftliche Fakultät, … - 2007

This paper deals with the use of the CAPM for capital budgeting purposes. Four different measures are deductively drawn from this model: the disequilibrium Net Present Value, the equilibrium Net Present Value, the disequilibrium Net Future Value, the equilibrium Net Future Value. While all of...

Persistent link: https://www.econbiz.de/10005055505

Accounting and economic measures: an integrated theory of capital budgeting

Magni, Carlo Alberto - MASTER CONSULTORES - 2009

average accounting rate generates a decision rule which is logically equivalent to the NPV rule for both accept …

Persistent link: https://www.econbiz.de/10010762964

Average Internal Rate of Return and investment decisions: A new perspective

Magni, Carlo Alberto - Dipartimento di Economia "Marco Biagi", Università … - 2010

The internal rate of return (IRR) is often used by managers and practitioners for investment decisions. Unfortunately, it has serious flaws: (i) multiple real-valued IRRs may arise, (ii) complex-valued IRRs may arise, (iii) the IRR is, in general, incompatible with the net present value (NPV) in...

Persistent link: https://www.econbiz.de/10008594387

Accounting and economic measures:An integrated theory of capital budgeting

Magni, Carlo Alberto - Dipartimento di Economia "Marco Biagi", Università … - 2009

average accounting rate generates a decision rule which is logically equivalent to the NPV rule for both accept …

Persistent link: https://www.econbiz.de/10008509400

Correct or incorrect application of CAPM? Correct or incorrect decisions with CAPM?

Magni, Carlo Alberto - Volkswirtschaftliche Fakultät, … - 2007

) CAPM capital budgeting decision-making based on disequilibrium NPV is deductively inferred by the Capital Asset Pricing … Model, (ii) the use of the disequilibrium NPV is widespread in finance both as a decision rule and as a valuation tool, (iii …’s (2005) project valuation method, on the basis of which Magni’s criticism to NPV is objected, leaves decision makers open to …

Persistent link: https://www.econbiz.de/10005836868

Strategic options and expert systems: a fruitful marriage

Magni, Carlo Alberto; Mastroleo, Giovanni; Vignola, Marina - MASTER CONSULTORES - 2009

Business economics does not provide any methodology for appraising strategic investments, relying on informal approaches. Conversely, financial economics offers us plenty of sophisticated mathematical models unsuitable for applications and based on unrealistic assumptions. This paper presents an...

Persistent link: https://www.econbiz.de/10010763043

Investment decisions, NPV and bounded rationality

Magni, Carlo Alberto - MASTER CONSULTORES - 2010

sound decision model. In real-life applications, decision makers use the NPV rule, but apply a subjectively determined …

Persistent link: https://www.econbiz.de/10010763079

Investment decisions, equivalent risk and bounded rationality

Magni, Carlo Alberto - Volkswirtschaftliche Fakultät, … - 2007

cognitive analysis of the decision-making process implied by the maximization problem. The model may be conveniently rescued if … ‘mixed strategy’, currently in use by many real-life decision makers, opens up terrain to a fruitful cooperation between …

Persistent link: https://www.econbiz.de/10005619621

The AIRR Approach for Investment Performance Measurement

Magni, Carlo Alberto - MASTER CONSULTORES - 2012

This paper introduces a new method of investment performance analysis, based on the recent approach of Average Internal Rate of Return (AIRR). We show that the approach generates rates of return suitable for assessing both a fund´s (portfolio´s) performance and a manager´s performance. The...

Persistent link: https://www.econbiz.de/10010762942

The Internal-Rate-of-Return approach and the AIRR paradigm: A refutation and a corroboration

Magni, Carlo Alberto - MASTER CONSULTORES - 2012

This paper shows that the Internal-Rate-of-Return (IRR) approach is unreliable, and that the recently introduced Average-Internal-Rate-of-Return (AIRR) model constitutes the basis for an alternative theoretical paradigm of rate of return. To this end, we divide the paper into two parts: a pars...

Persistent link: https://www.econbiz.de/10010762951