Gamba, Andrea; Sick, Gordon A.; León, Carmen Aranda - In: Economic Notes 37 (2008) 1, pp. 31-58
It is common practice in financial derivative valuation to use a discount factor based on the riskless debt rate. But, to what extent is this discount factor appropriate for cash flows emerging in capital budgeting? To answer this question, we introduce a framework for real asset valuation that...