Business, Management and Accounting
3 years ago

Continuous cash flow projects may be undervalued, leading to costly errors.

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Paper Summary

The article discusses how to evaluate investment projects that generate continuous cash flows, like those in the service sector and retail trade. The researchers developed a method using discounted cash flow models to show that in short-term projects with high costs, the net present value of continuous cash flows can be significantly higher than discrete cash flows. This difference can lead to errors in project selection and effectiveness assessment.