DOMINANCE CRITERIA FOR THE RANKING OF PROJECTS WITH AN IMPERFECT CAPITAL MARKET

Dominance criteria are established for problems of choice between alternative discrete investments where financial markets have unequal borrowing and lending interest rates. In the general case, the necessary and sufficient condition for all investors to prefer cash flow Q to cash flow R under non-satiety, is that Q can be converted to a superior flow to R - element by element. Where negative arguments of the decision maker's utility function are prohibited, it is necessary and sufficient that realisable value for Q exceeds realisable value for R at all times. A four stage procedure completes the decision making process where no inter-project dominance exists.