Applying The Learning Curve To Operating Cash Flows In A Capital-Budgeting Framework

This paper discusses the way financial managers can and should include the learning curve and its impact on cash flows when evaluating proposed capital projects. After examining finance text books and survey results to show that the learning curve is an ignored part of financial decision making, we briefly develop the mathematics of the learning curve then illustrate its application to labor costs and operating cash flow. We calculate the difference between operating cash flows without and with learning to illustrate the systematic impact of the benefit of learning. We note that applying the learning curve to the estimation of expected operating cash flows offers financial managers the opportunity not only to enhance the evaluation process, but also to provide a useful way to look at investing and financing projects. (JEL: C60, M41

Adam Smith Revisited

This study represents an interpretation of Adam Smith's attitude toward a commercial society based upon natural liberty. In developing the thesis that the two works, The Theory of Moral Sentiments and Wealth of Nations, are logically consistent, it is necessary to establish the reason of reasons why Adam Smith embraced a commercial society based upon the "obvious and simple system of natural liberty." It will be established that he embraced such as system because it allowed the maximum accumulation of capital, which is the manifestation of being truly virtuous as developed in his Moral Sentiments. To go one step further, it will be seen that, so far as Smith is concerned, it is the rising bourgeoisie, the manufacturers and artificers, which is truly virtuous, i.e., accumulates capital

Financial Management and the 1966 Credit Crunch: A Study of Financial Myopia

This dissertation is an analysis of the way businessmen relate to money. Specifically, it analyzes the factors contributing to the business sector's demand for funds during the period 1964-1966 in order to determine the role this demand played in the financial panic of 1966

Effect Of Legal Counsel Activity On The Cost Of Municipal Bond Offerings

The authors examine the relationship between interest cost to the issuer of municipal bonds and legal counsel associated with the offering. Modeling interest cost with explanatory variables reflecting legal counsel, issue characteristics, and conditions in the financial markets, the authors conclude that offerings in which an active bond counsel participated had average interest costs statistically significantly lower than those without such counsel. Offerings involving issuer=s counsel and activity of underwriter=s counsel experienced statistically higher average interest costs than otherwise. The authors note that their results are consistent with the certification hypothesis

Model for Assessing Human Papillomavirus Vaccination Strategies

A prophylactic quadrivalent vaccine can cost-effectively reduce the incidence of cervical cancer, cervical intraepithelial neoplasia, and genital warts

In-Substance Defeasance And Shareholders Wealth

In November, 1983, the Financial Accounting Standards Board issued Statement No. 76: Extinguishment of Debt. The Statement permitted corporations completing an in-substance defeasance to recognize an increase in earnings and earnings per share. High interest rates in 1984 and the Statement encouraged corporate managers to in-substance defeasance debt and show the associated increase in earnings per share. In our examination of 19 companies defeasing bonds during the period 1983-1985, we found no impact on stock price. Although the process led to an accounting profit for each company, investors interpreted the change in capital structure to be transitory and/or too small to require altering their investment portfolios

Business Financial Management

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