Ecology, Environment and Conservation Paper

Vol.18, Issue 2, 2012; Page No.(351-356)

APPLICATION OF THE THEORY OF INTEREST AND EXHAUSTION TO MINERAL INVESTMENT DECISIONS

Francis D. Udoh

Abstract

This paper presents some extensions of Fisher’s theory of interest and Hotelling’s fundamental economic theory of extraction of exhaustible resources as applied to the mineral firm. The optimal rate of depletion is applied to the operation of a single mine and the equilibrium rule by which the firm would allocate production to one period rather than another as a function of the rate of interest is described and what happens when the rate of interest rises is shown. Fisher opined that the fundamental rule for individual equilibrium is that, the amount borrowed or lent is always determined by the rule that the marginal time preference must be equal to the given rate of interest or expressing this geometrically, that the slope of the indifference curve at the chosen point must equal the slope of the interest line. The marginal return on investment will equal the market rate of interest and the amount of investment would be determined by a ranking of projects whose rates of return would be over the market rate. Given the diminishing marginal rates of return, the view of supply and demand is given by the supply or market rate of investment. Therefore, for the mineral firm to remain competitive, corporate managers will have to employ improved and systematic decision processes that will explicitly embody the mineral firm’s objectives and desired goals while taking into consideration the firm’s resource constraints.

Enter your contact information below to receive full paper.
Your Name :
Email:
Phone:
City:
Cost of Full Paper: Rs.75 for Indian Nationals or $20 (USD) for international subscribers.
By clicking on Request Paper you Agree to pay the above mentioned cost per paper.
  
Journal Issues
Vol 23, Issue 1, 2017
Vol 23, Feb 2017 Suppl. Issue
Vol 22, Dec 2016 Suppl. Issue
Vol 22, Issue 4, 2016
Vol 22, Sept. Suppl. Issue , 2016
Vol 22, Issue 3, 2016
Vol. 22, June Suppl. Issue 2016
Vol 22, Issue 2, 2016
Vol. 22, April Suppl. Issue 2016
Vol 22, Issue 1, 2016
Vol 21, Issue 4, 2015
Vol. 21 Dec. 2015 Suppl. Issue
Vol. 21 Nov. 2015 Suppl. Issue
Vol 21, Issue 3, 2015
Vol 21, Issue 2, 2015
Vol. 21 Suppl.Issue August 2015
Vol 21.Suppl.Issue June 2015
Vol 21, Issue 1, 2015
Supplement Issue, Dec. 2014
Special Issue-2014
Vol 20, Issue 4, 2014
Vol 20, Issue 3, 2014
Vol 20, Issue 2, 2014
Vol. 20 Issue 01, 2014
Vol. 19 Issue 04, 2013
Vol. 19 Issue 03, 2013
Vol. 19, Issue 02, 2013
Vol. 19, Issue 01, 2013
Vol.18, Issue 04, 2012
Vol.18, Issue 3, 2012
Vol.18, Issue 2, 2012
Vol.18, Issue 1, 2012
Vol.17, Issue 4, 2011
Vol.17, Issue 3, 2011
Vol.17, Issue 2, 2011
Vol.17, Issue 1, 2011
Vol.16, Issue 4, 2010
Vol.16, Issue 3, 2010
Vol.16, Issue 2, 2010
Vol.16, Issue 1, 2010
Vol.15, Issue 04, 2009
Vol.15, Issue 03, 2009
Vol.15, Issue 02, 2009
Vol.15, Issue 1, 2009
Vol.14, Issue 04, 2008
Vol.14, Issue 2-3, 2008
Vol.14, Issue 2-3, 2008
Vol.14, Issue 1, 2008
Vol.14, Issue 2-3, 2008
Vol.13, Issue 04, 2007
Vol.13, Issue 2, 2007
Vol.13, Issue 1, 2007
Vol.12, Issue 4, 2006
Vol.12, Issue 3, 2006
Vol.12, Issue 2, 2006
Vol.12, Issue 01, 2006
Vol.12, Issue 1, 2006
Vol.11, Issue 3,4, 2005
Vol.11, Issue 2, 2005
Vol.11, Issue 1, 2005
Vol.10, Issue 04, 2004
Vol.10, Issue 03, 2004
Vol.10, Issue 02, 2004
Vol.10, Issue 01, 2004
Vol.09, Issue 04, 2003
Vol.09, Issue 03, 2003
Vol.09, Issue 02, 2003
Vol.08, Issue 04, 2002
Vol.08, Issue 03, 2002
Vol.08, Issue 01, 2002
Vol.07, Issue 04, 2001
Vol.07, Issue 03, 2001
Vol.07, Issue 02, 2001
Vol.07, Issue 01, 2001
Vol.06, Issue 04, 2000
Vol.06, Issue 03, 2000
Vol.06, Issue 02, 2000
Vol.06, Issue 01, 2000
Vol.05, Issue 04, 1999
Vol.05, Issue 03, 1999
Vol.05, Issue 02, 1999
Vol.05, Issue 01, 1999
Vol.04, Issue 1,2, 1998
Vol.03, Issue 3,4, 1997
Vol.03, Issue 01, 1997
Vol.02, Issue 1,2, 1996
Vol.01, Issue 14, 1995
Looking for Past Issues? Click here to get them!!