Endogenous Indicators of the Joint Intertemporal Financing and Investing Program
Endogenous Indicators of the Joint Intertemporal Financing and Investing Program

Summary/Abstract: Van Horne and Vachowiz Jr. (2001, 2003) state that the criteria for selecting long-term investments is possibly the most complicated and the most disputable issue in financial management. The purpose of this paper is further in-depth understanding of this issue. The paper is intended as a continuation of discussion with highly respected Dr. Kruschwitz (1995, 2000) on the meanings of calculated endogenous rate of return (deu. “Endogene Kalkulationszinsfuse”) and endogenous capitalization (deu. “Endogene Kapitalwert”), covered in his relevant books “Investitionsrechnung” (6th and 8th eds.). It will be proved that the concept of endogenous calculated profitability offered by honourable Dr. Kruschwitz contains serious fallacy, which also remains in the latest editions of this famous book. The goal is to explain the contents of endogenous rates of return and endogenous capitalizations with the help of linear programming by means of the Stiefel (1960) systems of equation and theorem of duality.

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