(The) determination of discount rate applied to after horizon time cash flow in linear programming project selection model

Abstract

This thesis is concerned with the determination of discount rate applied to after horizon time cash flow in linear programming project selection model when its objective function contains the present worth of after horizon time cash flow. In this thesis the study is concentrated on the method of how the discount rate should be determined considering to find an optimal solution procedure and we show that it is the MARR(Minimum Attractive Rate of Return). In order to apply the discount rate to some general cases, we build a new model that covers the difficulty which can occur in the existing short-term model because of the intrinsic factors of linear programming models. Finally, we build a long-term deposit model extending short-term model to maximize objective function value.