A Model For Socially Responsible New Technology Decisions

Abstract

Firms use relatively unsophisticated techniques to incorporate the unique uncertainties associated with new technology into their capital budgeting decisions. Evidenced supports that firms would prefer to have a more accurate and standardized method to make adjustments for these uncertainties. Proposed is a method of incorporating the uncertainties of new technology into the traditional NPV calculation via the use of a specially derived risk-adjusted discount rate.