----------------- HES POSTING ----------------- Great summary provided by Avi Cohen. Was Boulding setting forth the concept of internal rate of return (IRR) in the excerpt below -- i.e., was it his concept -- or simply utilizing it in explaining his model? >In the second, Boulding (1935), extends the profit-maximizing >condition of marginal revenue equals marginal cost to incorporate the >element of time as an explicit variable of the problem. Assuming >perfect foresight, Boulding examines the complete history (revenues, >costs, net revenues) of a single investment, from the day of its >inception to the day of its final liquidation. Given a physical >production function which includes the period of production as a >variable, the investor maximizes the internal rate of return over the life >of the investment by choosing the optimal rates of input and period of >production. The maximum rate of return is the rate of interest which >makes, at any date, the present values of revenues (outputs) equal to >the present value of costs (inputs). Scott Cullen ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]