Corporate finance textbooks (e.g., Webster 2003, Chapter 12) recommend that a company invest in a project if and only if the project’s internal rate of return exceeds the cost of capital. If companies operated this way, their investment decisions would be independent across projects within the company, conditional on the projects’ cash flows being independent. In practice, such conditional inde...

All engineering students at Rowan University are required to take the 8-semester Engineering Clinic sequence wherein multidisciplinary student teams engage in semester-long design projects. In addition to projects that are funded by local industry, faculty research grants or departmental budgets, a Venture Capital Fund has been created, which is specifically ear-marked for the development of or...

Investments in technology create a large amount of capital investments by major companies. Assessing such investment projects is identified as critical to the efficient assignment of resources. Viewing investment projects as real options, this paper expands a method for assessing technology investment decisions in the linkage existence of uncertainty and competition. It combines the game-theore...

Capital budgeting frequently involves multiple stages at which firms can continue or abandon ongoing projects. In this paper, we study a project requiring two stages of investment. Failure to fund Stage 1 of the investment precludes investment in Stage 2, whereas failure to fund Stage 2 results in early termination. In contrast to the existing literature, we assume that the firm can limit the m...

While existing literature assumes that the human capital intensity of professional services leads to small and flimsy firms, several professional services feature large, long-lived firms. To develop insights about firm size and industry structure in human capital intensive industries, I analyze the structure and evolution of the advertising industry. Drawing on a range of quantitative and quali...

Article history: Received 21 November 2008 Received in revised form 21 July 2009 Accepted 8 August 2009 Available online 23 June 2010 This paper examines how public market information relates to the initiation of venture capital projects. Analysis of venture capital investments in the U.S. between 1980 and 2007 indicates that venture capitalists tend to defer new investment projects in target i...

The new portfolio optimization engine, OptFolioTM, simultaneously addresses financial return goals, catastrophic loss avoidance, and performance probability. The innovations embedded in OptFolio enable users to confidently design effective plans for achieving financial goals, employing accurate analysis based on real data. Traditional analysis and prediction methods are based on mean variance a...

A fixed budget must be allocated to a finite number of different projects with uncertain outputs. The expected marginal productivity of capital in a project first increases then decreases with the amount of capital invested. Such behavior is common when output is a probability (of escaping infection, succeeding with an R&D project. . .). When the total budget is below some threshold, it is inve...