Journal Article Regional Allocation of Investment: Comment Get access Robert Dorfman Robert Dorfman Harvard University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 77, Issue 1, February 1963, Pages 162–165, https://doi.org/10.2307/1879381 Published: 01 February 1963

<qd> “They also serve who only stand and wait.” — Milton </qd> Statement of the problems, 351. — Böhm-Bawerk's analysis, 352. — Interest in a two-sector economy, 355. — Digression on waiting, 359. — Calculation of the period of production, 362. — Necessity of positive rate of interest, 364. — Sketch of more complicated models, 365. — Conclusions, 367. — Mathematical appendix, 367; the bathtub theorem, 367; solution of the Solow two-sector model, 368; direct calculation of the period of investment of waiting, 370.

Reviews the book "A Study of Aggregate Consumption Functions," by Robert Ferber.

Nearly one hundred years after Irving Fisher' persuasive argument that net present value is the fundamental criterion for appraising investment projects, businessmen and bankers continue to consider the internal rate of return. Business practice is justified in some circumstances. It has long been recognized that a firm will grow asymptotically at a rate equal to the largest real positive root of an individual project' rate of return equation if the net cash flows are continually reinvested in projects of the same type. That same root also controls the firm' asymptotic growth rate if any fixed proportion of the cash flows is reinvested. The other roots of the equation are important also, since the stability of the firm' growth path depends on them.