Applying definition (10), we have
By substituting (II1) and (II2) into (9), and dividing both sides by
we have
An obvious solution of (II3) is a = r, because the terms then cancel each other in (II3). This does not, however, indicate that (6) must necessarily hold. Thus r might in this case be any interest rate used for discounting the future net cash flows.
The next section (Appendix III)
The previous section (Appendix I)
The contents section of Salmi and Luoma (1981)
Other scientific publications by Timo Salmi in WWW format
