Borrowing and Lending in a Mathematical Programming Model of Capital Budgeting

Weingartner, in 1963, published his solution to the Lorie and Savage problem of choosing the optimal combination of projects given that capital rationing occurs in more than one period. This paper discusses the rationale of the Weingartner model and develops a systematic way of treating lending. Ind...

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Bibliographic Details
Published in:Journal of business finance & accounting 1974-06, Vol.1 (2), p.267-291
Main Author: BHASKAR, K. N.
Format: Article
Language:English
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Summary:Weingartner, in 1963, published his solution to the Lorie and Savage problem of choosing the optimal combination of projects given that capital rationing occurs in more than one period. This paper discusses the rationale of the Weingartner model and develops a systematic way of treating lending. Indeed not to include lending can lead to sub‐optimal results. Borrowing is then included into the model at the cost of making certain restrictive assumptions.
ISSN:0306-686X
1468-5957
DOI:10.1111/j.1468-5957.1974.tb00863.x