부산대학교 도서관

The article presents a discussion on capital budgeting methods that are used in Colombia. A major factor in Colombia's economy has been high inflation (ranging from 16.64 percent in 1983 to 28.8 percent in 1973; the inflation for 1985 was 22.45 percent). In order to contain inflation, the government imposes various restrictions on availability of credit. It is, therefore, of interest to look at the use of simple tools like discounting methods and mathematical programming for capital budgeting decisions. Such decisions involve not only the time value of money, but also risk, uncertainty, and capital rationing. Various methods for capital budgeting that are used in Colombia are: internal rate of return, net present value, benefit-cost ratio, annual equivalent cost, profit-investment ratio, and payback period. The last two methods do not recognize the time value of money; they define the benefit/cost ratio as the ratio between the present value of positive cash flows and the present value of negative cash flows.