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An enhanced refresher on discounted net present value computations with an additional focus on risk and uncertainty

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  • Maggie Foley
  • Shuangjin Wang

Abstract

Discounted present value (DPV) calculations have appeared in textbooks as well as numerous peer‐reviewed journal articles. Such articles address a wide variety of topics/issues, ranging from migration to educational pursuit to investment in new plant and equipment to the NFL draft. Recognizing the remarkably versatile and useful tools that the DPV concepts are to valuation and intelligent decision‐making, some years ago, the Harvard Business Review published a discussion by Gallo of the derivation and uses of DPVs (and NPVs). This note extends and corrects the analysis in Gallo so as to make it more accurate and useful to the reader.

Suggested Citation

  • Maggie Foley & Shuangjin Wang, 2024. "An enhanced refresher on discounted net present value computations with an additional focus on risk and uncertainty," American Journal of Economics and Sociology, Wiley Blackwell, vol. 83(4), pages 737-740, September.
    • Handle: RePEc:bla:ajecsc:v:83:y:2024:i:4:p:737-740
    DOI: 10.1111/ajes.12574
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    References listed on IDEAS

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    1. Giora Hanoch, 1967. "An Economic Analysis of Earnings and Schooling," Journal of Human Resources, University of Wisconsin Press, vol. 2(3), pages 310-329.
    2. Bowles, Samuel, 1970. "Migration as Investment: Empirical Tests of the Human Investment Approach to Geographical Mobility," The Review of Economics and Statistics, MIT Press, vol. 52(4), pages 356-362, November.
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