When selecting amongst a set of investment projects, the decision-maker cannot act as if her decision is made in isolation: Each investment has an impact upon subsequent cash flows and affects with future investments will be feasible and desirable. Our model provides a dynamic context in which her investment decisions can be analyzed. Our model generalizes the multi-period investment models of Gale (1965), Lippman (1970), and Cantor and Lippman (1983), by allowing an arbitrary finite number of projects. We emphasize that neither interest rates, nor net present values, nor internal rates of return are part of our model. However, all three notions arise as a consequence of our basic assumptions. In this paper we introduce a new technique for evaluating bundles of investments, the upper envelope.

IN THIS PAPER we present a multiperiod model of investment and reinvestment in which the investor's goal is the maximization of terminal wealth over the finite horizon in which economic activity occurs. The model entails the absence of risk, constant returns-to-scale, stationarity, and a borrowing constraint. The main point is to characterize the relationship between an investment project's asymptotic (internal) growth rate and its set of internal-rates-of-return, thereby provid