The assessment of investment projects by the net present value method presupposes that the discount rate and the project deadline are known. In literature, however, it is commonly accepted that generally the discount rate cannot be determined with sufficient accuracy. Moreover, the project deadline is generally subject to negotiations. In this paper, we develop a procedure for computing the pro...

We estimate discount rates of 555 subjects using a laboratory task and …nd that these individual discount rates predict inter-individual variation in …eld behaviors (e.g., exercise, BMI, smoking). The correlation between the discount rate and each …eld behavior is small: none exceeds 0.28 and many are near 0. However, the discount rate has at least as much predictive power as any variable in ou...

This study presents some evidence of discount rate selection on goodwill impairment testing under the new requirements of FRS 36. The selection of discount rates is believed to be an important key factor that affects the outcome of impairment assessment, especially when using the method of value in use. This study objectively examines the Singapore listed firm’s selection of discount rates disc...

Introduction Since the Stern Review (Stern 2007) and the debate it has sparked off, the discount rate has been at the center of heated discussions about climate policies. In the very long run, the discount rate makes a huge difference in the evaluation of policies. The following table (Table 1) shows the minimum return that a $1 investment for the future should have to be considered better than...

Using data from reorganization proposals filed by bankrupt Canadian firms, we estimate the discount rate implicit in the creditors’ reorganization decision. Using two approaches, a grid-search and an optimization algorithm, we estimate the implicit monthly discount rate in reorganization to be around 5 percent, which corresponds to an annual discount rate of 87 percent.

The mean discount rate for a simple stochastic model behaves asymptotically roughly like 1/ √ n in contrast to the usual geometric discounting in a deterministic model. AMS (2000) subject classifications. 60F99, 60J05, 60G42.

The objective of this paper is to determine the socially optimal discount rate for public investment projects that entail costs and benefits in the very long run. We suppose that there is an exogenous process for the growth of consumption per capita, which is stochastic. We first evaluate the determinants of the discount rate for a specific horizon when the representative agent has a recursive ...

To justify substantial carbon emission reductions, recent literature on cost-benefit analysis of climate change suggests discounting environmental quality at a lower discount rate than the standard consumption discount rate. Recent literature also shows that a theoretical foundation for such a lower environmental discount rate requires rising willingness-to-pay for environmental quality (WTP). ...

Purpose We conduct a hypothetical dictator game with social distance and time delays using conjoint analysis. Design / methodology / approach Responses from 1,347 Japanese adults are collected through an online survey, and their responses are analyzed using a random parameter logit model. Findings Social preference for the present income of a stranger equals social preference for the income of ...

This working note provides a basic overview of discounting in the context of climate change policy. After defining the social discount factor and social discount rate in terms of shadow prices (section 2), and noting the limitations of cost-benefit analysis for climate change (section 3), the determination of efficient social discount rates is discussed given: the impact of uncertainty about fu...