OPTIMAL INVESTMENT POLICY FROM THE STANDPOINT OF THE FIRM

CHOIX DES INVESTISSEMENTS DU POINT DE VUE DE L'ECONOMIE D'ENTREPRISE ET DU POINT DE VUE DE LA COLLECTIVITE

This report is the text for a graduate course introducing optimal investment applied to transportation. The subject is described in three major areas: 1. Economic forecasting and decision making. Purpose and methods. Applications of probabilities and statistics to smoothing, analytical modelling and testing, necessity of subjective probabilities and their implications. Detailed example of train vs. plane preference modelling. 2. Optimal investment policy from the standpoint of the firm. Reminder of annuities, etc. Various depreciation methods, present discounted value of an investment, example of a single fiscal year, limitations. Discounted cash flow and its relation to usual accounting practice; use of computer with an example. Various choice criteria (choice of the proper discount rate, exclusion criteria, optimal policy under certainty.) Effect of risk and uncertainty on decision making: safety factors, sensitivity analysis, choice theory under various levels of uncertainty. Brief description of the classical algorithms. 3. Optimal investment policy from the standpoint of the collectivity. Cost-benefit analysis. "Social" balance sheet: global psychological value + external benefits. Extreme difficulty of estimating the consumer plus producer surplus in monetary terms. Evaluating the costs to the transportation authority, the consumers, and the third parties. Intervention of the Government.

  • Corporate Authors:

    Ecole Polytechnique Federale de Lausanne (EPFL)

    Urban Transport Systems Laboratory, School of Architecture
    Lausanne,   Switzerland  1015
  • Authors:
    • BAUMGARTNER, J P
  • Publication Date: 1973-6

Media Info

  • Features: Figures; Photos;

Subject/Index Terms

Filing Info

  • Accession Number: 00072073
  • Record Type: Publication
  • Source Agency: Transportation Systems Center
  • Files: TRIS
  • Created Date: May 19 1975 12:00AM