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A Note on the Application of Linear Programming to Capital Budgeting

Published online by Cambridge University Press:  19 October 2009

Peter Lusztig  and
Bernhard Schwab
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Extract

The application of linear programming techniques to the problem of capital budgeting has repeatedly been proposed in the literature. However, while the potential of linear programming models for this important area of business decisions is generally recognized, practical applications still face some severe limitations. This note focuses on one particular problem peculiar to the application of programming techniques to capital budgeting, namely the mutual dependence between the optimal solution of the linear programming model and the discount rate used to calculate the coefficients of its objective function.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 3 , Issue 4 , December 1968 , pp. 427 - 431
Copyright
Copyright © School of Business Administration, University of Washington 1968

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References

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