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Capital Budgeting under Rationing: Comments on the Lusztig and Schwab Procedure

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  • Whitmore, G. A.
  • Amey, Lloyd R.

Abstract

The interdependence of the optimal investment program and capital prices, when capital and other markets are imperfect, has been one of the least tractable problems in capital budgeting. The nature of the problem is described in Amey [1]. Suggested solutions to the problem may be found in Baumol and Quandt [2], Carleton [3], Hirshleifer [4], Lusztig and Schwab [7], and Weingartner [9]. The purpose of this note is to extend the mathematical results reported by Lusztig and Schwab (L & S) and draw implications that will shed light on the controversy.

Suggested Citation

  • Whitmore, G. A. & Amey, Lloyd R., 1973. "Capital Budgeting under Rationing: Comments on the Lusztig and Schwab Procedure," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 8(1), pages 127-135, January.
    • Handle: RePEc:cup:jfinqa:v:8:y:1973:i:01:p:127-135_01
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    Cited by:

    1. D. Babusiaux, 1988. "Financing investment and calculations of profitability [Financement des investissements et calculs de rentabilité]," Working Papers hal-01534450, HAL.

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