A Neo-Austrian perspective on the value of growth prospects
The valuation framework inherent to the neo-Austrian theory of capital set forth by Hicks’ (1973) is discussed in terms of a fundamental formula which disentangles the profitability associated with the scale of operation from the internal rate of return of the production process. The formula is employed to tailor a perspective on the value of investment prospects, meant to complement the insights embodied by Tobin’s q metric. Balance sheet recessions are briefly discussed as a cogent line of application of our formula. Potential lines of progress are envisioned.
|Date of creation:||2015|
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