Discounted cash flow methods and the fallacious reinvestment assumption: A review of recent texts

International Journal of Phytoremediation

Volumn 21, Issue 1, 2001, Pages 105-116

  Keef, Stephen P ^a   Roush, Melvin L ^a  

^a VICTORIA UNIVERSITY OF WELLINGTON   (New Zealand)

Author keywords

Irr; Npv; Reinvestment assumption; Survey

Indexed keywords

EID: 85066182782     PISSN: 15226514     EISSN: 15497879     Source Type: Journal    
DOI: 10.1080/09639280122722     Document Type: Article

References (18)

1. Alchian, A. A., 1955. The rate of interest, Fisher's rate of return over costs and Keynes' internal rate of return. American Economic Review, 45 (5): 938–942.
2. Appleyard, A. R., and Strong, N. C., 1985. Textbook inconsistencies in graphing valuation equations: a note. The Financial Review, 20 (4): 361–367.
3. Beedles, W. L., and Joy, O. M., 1997. Mutually exclusive projects with unequal lives, reinvestment plans and unequal required rates of return. Journal of Financial Education, 23 (2): 81–83.
4. Brealey, R. A., and Myers, S. C., 2000. Principles of Corporate Finance, 6th edition., Boston, Massachusetts: Irwin, McGraw-Hill.
5. Brigham, E. F., and Houston, J. F., 1998. Fundamentals of Corporate Finance, 11th edition, Boston, Massachusetts: Irwin, McGraw-Hill.
6. Conine, T. E., and Tamarkin, M., 1988. Textbook inconsistencies in graphing valuation equations: a further note. The Financial Review, 23 (2): 237–241.
7. Dudley, C. L., 1972. A note on reinvestment assumptions in choosing between net present value and internal rate of return. Journal of Finance, 27 (4): 907–915.
8. Fisher, I., 1930. The Theory of Interest, New York, NY: The Macmillan Company. [Reprinted by Augustus M. Kelley in 1986]
9. Hartley, R. V., 1990. Teaching capital budgeting with variable reinvestment rates. Issues in Accounting Education, 6 (2): 268–280.
10. Herbst, A. F., 1982. Capital Budgeting: Theory, Quantitative Methods, and Applications, New York, NY: Harper & Row Publishers.
11. Keane, S. M., 1979. The internal rate of return and the reinvestment fallacy. Abacus, 15 (1): 48–55.
12. Lohmann, J. R., 1988. The IRR, NPV and the fallacy of the reinvestment rate assumptions'. The Engineering Economist, 33 (4): 303–330.
13. McGuire, R. A., and Willman, E. S., 1999. Textbook explanations of inflation in the 1970s. Public Finance Review, 27 (1): 52–76.
14. Pollard, W. B., 1986. Teaching standard costs: a look at textbook differences in overhead variance analysis. Journal of Accounting, 4 (1): 211–220.
15. Renshaw, E., 1957. The arithmetic of capital budgeting decisions. The Journal of Business, 30 (3): 193–201.
16. Ross, S. A., Westerfield, R. W., and Jaffe, J., 1999. Corporate Finance, 5th edition., Boston, Massachusetts: Irwin, McGraw-Hill.
17. Samuels, J. M., Wilkes, F. M., and Brayshaw, R. E., 1999. Financial Management and Decision Making, London: International Thomson Business Press.
18. Solomon, E., 1956. The arithmetic of capital budgeting decisions. The Journal of Business, 29 (12): 124–129.