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The effect of capitalization on financial return in periodic growth
A capital return rate function for growth processes is introduced and applied to financial considerations in periodically growing multiannual plants. The capital return rate function is composed of a momentary capital return function, a probability density function in the time domain, and their inte...
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
Elsevier
2019
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Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6838899/ https://www.ncbi.nlm.nih.gov/pubmed/31720470 http://dx.doi.org/10.1016/j.heliyon.2019.e02728 |
Sumario: | A capital return rate function for growth processes is introduced and applied to financial considerations in periodically growing multiannual plants. The capital return rate function is composed of a momentary capital return function, a probability density function in the time domain, and their integration over time or age. It is shown that the expected value of capital return rate within a single stand equals momentary capital return rate within an estate, integrated over an even distribution of stand ages. We distribute the capitalization to operative and non-operative capitalization. In the case of a low non-operative capitalization, financially sound operations favor relatively small amount of operative capital. In the case of a high, but constant non-operative capitalization, optimal practices correspond to those resulting in maximum sustainable yield. Appreciating non-operative capitalization favors small operative capitalization. Optimal rotation and operative capitalization are weak functions of increasing level of non-operative capitalization, even if they are strong functions of its increment rate. It is argued that large but non-appreciating non-operative capitalization, favoring practices corresponding to maximum sustainable yield, would not appear frequently. In summary, it is found that appreciation of non-operative capitalization dominates financially sustainable management practices. |
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