Project Balances as Division Coefficients and Implications for Rate of Return Analysis

Abstract

Project balances are shown to be the coefficients resulting from division of the future worth polynomial by a simple monomial and are used in representations of the future worth polynomial and its derivative. Those representations are used to provide elementary proofs for some rate of return analysis results making use of our project balance framework. We develop a convenient method to determine the existence of a root of multiplicity from the derivative of the future worth polynomial using project balances. This article incorporates a useful, unified collection of results that previously have been dispersed throughout the literature that should be of interest to technical economic analysts.

Notes

∗Any rate of return in Partition 2 not equal to 100% could be used; 200% was an arbitrary choice selected for convenience.