Teaching Net Present Value Analysis: Returns-to-Assets versus Returns-to-Equity

We survey textbooks from agricultural economics and other subject matter areas to determine their treatments of the returns-to-assets versus returns-to-equity methods for determining the net present value of investment projects. Textbook authors disagree about the appropriate method, often give conflicting advice as to how a given method should be applied, and do not show how the results of the two methods can be reconciled. We provide a consolidated discussion of the circumstances under which the two methods produce the same net present value.     

Coping with Stress in Outdoor Recreational Settings: An Application of Transactional Stress Theory

This study uses a transactional model of stress and coping as a way to understand how outdoor recreationists deal with negative setting elements during a recreation experience. Within the transactional model, coping behaviors can be viewed as the result of on-going transactions among personal and environmental factors, perceptions of threat or stress, and the perceived effectiveness of coping strategies. The current study focuses specifically on the relationship between reported levels of stress and the types of coping strategies used by recreationists in Glacier National Park. Findings suggest that certain behavioral and cognitive coping responses to stress are associated with different levels of reported stress. Specifically, respondents with lower levels of stress were more likely to engage in certain cognitive adjustments to cope with detracting situations. Respondents reporting higher levels of stress were more likely to engage in either direct action aimed at changing the environmental conditions or are displaced entirely from the recreational setting. In addition to these primary findings, the study discusses the range of coping behaviors employed.     

Applications of parks management information systems

The paper presents a conceptual model of an integrated management information system for municipal parks maintenance and operations. Research efforts in management information systems are presented in three categories: Business Research, Federally Sponsored Research, and Park and Recreation Systems Research. A case is made for further empirical research, the development of normative models, and evaluative criteria in an attempt to realize the full potential of electronic data processing in parks and recreation.     

ECONOMIC ANALYSIS IN THE MAINTENANCE,REPAIR, AND OVERHAUL INDUSTRY: AN OPTIONS APPROACH

This paper presents a practical case application of the real options framework to a multi-stage investment in the aerospace maintenance, repair, and overhaul (MRO) industry. With the deregulated commercial airline industry and military procurement reform, the $44 billion MRO sector must implement tools to remain strategically poised. In this case study, the MRO participant values a multi-stage irreversible expenditure in maintenance equipment and processes under air travel demand uncertainty using a real options analysis. The investment scenario is viewed from a delay, growth, and compound options framework, and an appropriate sensitivity analysis is performed. The main contribution of this paper is the detailed real option framing, valuation, and discussion that may be used as an illustration for industry practitioners or classroom instruction.     

Was there too little entry during the Dot Com Era?

We present four stylized facts about the Dot Com Era: (1) there was a widespread belief in a Get Big Fast business strategy, (2) the increase and decrease in public and private equity investment was most prominent in the Internet and information technology sectors, (3) the survival rate of dot com firms is on par with or higher than other emerging industries, and (4) firm survival is independent of private equity funding. To connect these findings we offer a herding model that accommodates a divergence between the information and incentives of venture capitalists and their investors. A Get Big Fast belief cascade could have led to overly focused investment in too few Internet startups and, as a result, too little entry.