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The purpose of this paper is to portray the valuation of financial investments as mental time travel.

In a series of thought investments, $1 invested in an investment fund is mentally projected forward in time and then discounted back to the present – with no objective time passing. The thought investments feature symmetric valuation (in which discount rates exactly match projection rates) and asymmetric valuation (in which discount rates and projection rates happen to differ). They show how asymmetric valuation can result in differences between the current personal value and market value of an investment and, by way of real-world illustration, between a closed-end investment fund's net asset value and its market value. The authors explore possible reasons for asymmetric valuation.

Thought investments illustrating mental time travel can be used to help understand both financial investment valuation generally and, more specifically, established explanations of the closed-end investment fund puzzle. The authors show how different expectations, different perceptions of time and risk and different risk and time preferences might help determine value.

There are vast literatures on prospection, discounting and future-orientated or intertemporal decision-making. The authors’ innovation is to illustrate how these mental activities might combine to facilitate financial investment valuation. In particular, the authors show that a low personal discount rate could be a consequence of a shortened perception of future time and vice versa.

The purpose of this paper is to establish the flow-to-equity method, the free cash flow (FCF) method, the adjusted present value method and the relationships between these methods when the FCF appears as an annuity. More specifically, we depart from the two most widely used evaluation settings. The first setting is that of Modigliani and Miller who based their analysis on a stationary FCF. The second setting is that of Miles and Ezzell who worked with an FCF that represents an autoregressive possess of first order.

Inspired by recent observations in the literature concerning cash flows, discount rates and values in discounted cash flow (DCF) methods, we mathematically derive DCF valuation formulas for annuities.

The following relationships are established: (a) the correct discount rate of the tax shield when the free cash flow takes the form of a first-order autoregressive annuity, (b) the direct valuation of the tax shield from the free cash flow for a first-order autoregressive annuity, (c) the correct translation from the required return on unlevered equity to the levered equity, when the free cash flow is a stationary annuity and (d) direct calculation of the unlevered and levered firm values and the value of the tax shield for a stationary annuity.

Until now the complete set of formulas for the valuation of stochastic annuities by different DCF methods has not been established in the literature. These formulas are developed here. These formulas are important for practitioners and academics when it comes to the valuation of cash flows of finite lifetime.

The purpose of this paper is to examine uncertainty in the social discount rate and explore the conditions favouring the application of higher present value welfare weights in the cost‐benefit analysis (CBA) of very long‐term social projects. The plausibility, or otherwise, of these conditions is an important matter generally but especially in relation to major environmental concerns associated with climate change.

The uncertainty conditions for a plausible range of discount rate values are examined in relation to the social time preference rate (STPR). This particular discount rate is favoured theoretically and has, in the latest EC guide to CBA for EU member states, been recommended for application in European social project appraisal. Value ranges for the main parameters are determined on the basis of surveys of empirical work and expert opinion. Then simulations based on alternative plausible probability distributions are used to explore the future time paths for discount factors.

Present value welfare weights decline to less than 2 per cent within 200 years if discounting is based on the full STPR. However, important appraisal contexts are identified where only the utility discount rate is relevant and this yields non‐trivial discount factors for distant future years.

The main new contribution is a direct empirical focus on the STPR and its component parameters under uncertainty. Alternative sets of long‐term discount factors are suggested for possible application in CBA. The paper will be of interest to academics specialising in applied welfare economics and also to practitioners involved in social project appraisal.

“Buy X Get X Free” promotions are popular across retail settings. Retailers promote a variety of products using this promotional frame. However, past research contains mixed findings about the effectiveness of this promotion compared to the straightforward discount on a single unit of a product. The goal of this research is to employ a theoretical lens to examine the effectiveness of “Buy X Get X Free” promotions.

The theoretical framework was tested in two experiments using different products and samples. The data collected from each experiment were analyzed using both descriptive and inferential techniques to assess support for the theoretical arguments.

Findings reveal that at identical levels of per-unit discount, the “Buy X Get X Free” promotion is perceived less favorably by consumers than a straightforward single-unit discount. Consumers perceive lower transaction value and acquisition value and, thereby, a lower purchase intention, from the “Buy X Get X Free” promotion compared to a single-unit discount.

This research was conducted keeping in mind the popularity of the “Buy X Get X Free” promotion in the real world. The findings caution retailers against indiscriminately using this promotional frame.

Using a theoretical lens, this research proposes and validates a framework to systematically examine consumers' perceptions of the two popular discount frames. The proposed theoretical framework provides a richer understanding of the underlying consumer psychology that drives the evaluation of these promotions. Further, primary data from lab experiments validates the framework. The research also helps advance the understanding of consumer evaluation of sales promotions in general.

Rewards from sales promotions may be either immediate (e.g. instant savings, coupons, instant rebates) or delayed (e.g. rebates, refunds). The latter type is of interest in this study. The purpose of this paper is to present the hyperbolic discounting framework as an explanation for how consumers delay‐discount rewards, and test whether this holds for both high‐price and low‐price product categories.

Data were collected by administering two online surveys to respondents. One survey presented choice scenarios between sales promotion formats for a high‐priced product (a laptop, n=154) and the other for a low‐priced product (a cell phone, n=98). Hyperbolic and exponential functions were then fitted to the data.

The hyperbolic function had a better fit than the exponential function for the low‐priced product. However, this effect was not evident in the case of the high‐priced product; no significant difference was found between the functions. The rate of discounting was greater for the high‐priced product than for the low‐priced product. Thus, for low‐priced products, rather than discount a reward rationally, consumers tend to discount the value of the reward at a decreasing rate.

This study addresses delay discounting in the context of a typical consumer buying situation. It also addresses the possibility of consumers applying different forms of discounting to products at different price levels and tests for the same. The results are of considerable significance for marketers wishing to offer price discounts to consumers. For low‐priced products, marketers seem to have more flexibility in delaying the reward, since the rate of discounting decreases for longer delay periods. At the same time, the discount rate for high‐priced products is higher than that for low‐priced products, hence delay periods may have a more critical role as discounted values fall steeply with an increase in delay to reward.

This study examines the long-term link between fair valuation uncertainty and discounts/premia in closed-end funds. This study argues that, in exploring the close-end funds puzzle, prior research generally omits to consider the uncertainty surrounding the measurement of funds' financial disclosure, as reflected in the fair value hierarchy, when investment specialty differs across funds.

Regressions were employed to explore how the fair value hierarchy affects closed-end funds' discounts/premia when investment specialty differs. The authors also examine the effects pre- and post-2012 to explore if that relationship changes due to the additional disclosure requirements enacted at the end of 2011.

The authors find that the three levels of the fair value hierarchy have effects that vary according to a fund's specialty. For equity specialized funds, Level 3 significantly increases discounts and decreases premia, suggesting the impact of valuation uncertainty that underlies Level 3 estimates; this relationship disappears (decreases in severity) for premia (discount) experiencing funds post-2012. In contrast, Level 1 and Level 2 do not have any significant effect on discounts or premia except that post-2012, Level 2 begins to display discount decreasing effects. For bond specialized funds, no significant association was noted between premia and any of the fair value levels except that post-2012, Level 3 begins to display premium increasing effects. However, results are different for discounts. The authors note that Level 1 valuations significantly increase discounts, but only post-2012; Level 2 valuations significantly decrease discounts (pre- and post-2012), consistent with such estimates incorporating unique and relevant information; and Level 3 valuations do not have a significant effect on discounts.

The results of this study revisit prior evidence and indicate that results about the effects of fair value measurement and the closed-end funds' puzzle are sensitive to the period length being considered and the investment specialty of the fund. The authors also note that additional disclosure regarding Level 3 valuation inputs decreases market concern for valuation uncertainty and increases the liquidity benefits of investing in Level 3 carrying funds.

This paper aims to identify conceptual changes in the practical application of asset impairment testing methods as required under IAS (International Accounting Standards) 36.

The paper explores general principles for an impairment testing framework, to address impairment issues that arise in valuation practice.

This paper shows that the way value in use is required to be assessed is technically flawed, prone to application error, and creates conceptual and financial mismatches with the requirements of other accounting standards.

From a practical perspective, the consequential scope for valuation errors is further exacerbated by the reluctance of company directors to accept the need for impairment and, in some cases, by gaming.

This paper provides a practitioner's viewpoint to impairment testing under the IAS, and identifies several inconsistencies with the application of the standard.

This research paper has two objectives. The first is to shed light on the consistency in and quality of the applied valuation models. The second objective is to analyse uniformity on important valuation input variables throughout 1994‐2002.

More than 150 original valuation reports are retrieved and qualitatively checked on model consistency, for example on discounting methods. The impact of the inconsistencies on the end value were calculated by using a dummy discounted cash flow model (DCF). The uniformity of the input variables net yield, discount rate and exit yield are quantitatively determined: is there a decreasing standard deviation through time?

There appears to be little consistency: the Dutch appraisers use a variety of methods within the DCF method. Cash flows are discounted quarterly in advance, yearly in arrear and averaged over the year, only three of the ten most frequent used appraisers use a flexible inflation scenario, etc. These different approaches can have a large impact on the appraisal value. As for the uniformity, the standard deviation for all three variables has not decreased through time.

The conclusions and recommendations of this research have been used by the valuation committee of the ROZ/IPD Netherlands Property Index to improve and extend the valuation guidelines.

Valuation models, which are the foundation of benchmarks, have never been researched on a large scale due to confidential issues. This research appears to be the first to actually analyse valuation models of many different appraisal companies in one country, The Netherlands. The participants of the ROZ/IPD Netherlands Property Index own 85 per cent of the €38 billion institutionally invested value in real estate in The Netherlands. Their policy decisions are partially based on the comparison to the Dutch benchmark. Therefore consistency and uniformity of the valuation models is critical.

The purpose of this paper is to examine the applicability of the alternative way of discounting, such as the hyperbolic discount method, for the economic feasibility test on Free Trade Zone development project that needs intergenerational analysis.

To analyze the effects of applying alternative discounting method in the cost-benefit analysis, this paper uses the hyperbolic discount method and HM-Treasury’s method (Britain), as well as the traditional exponential discount method. Also, this study uses benefit and cost data from the actual feasibility test of the Free Trade Zone development project in Korea, to obtain better policy implication.

For the case of long-term analysis, using the exponential discounting method in the benefit-cost analysis could not give us balanced analytic results, because it discounts too much on future generation’s benefits. In contrast, if we use the hyperbolic discounting method, we could obtain better balanced results since it can control the generational effects. This paper also finds that for the results to be valid, the analysis period must be expanded long enough (a minimum of 100 years).

The major findings of this paper confirm the results of previous studies regarding long-term benefit-cost analysis. Also, the result of this paper is properly compatible with the findings of behavioral economics, such as the time inconsistency of preferences. However, no research has been done with the proper length of analytic periods for using hyperbolic discounting yet. To examine this matter, this paper performs benefit-cost analysis with actual data from the feasibility studies in Korea. To the best of the author’s knowledge, this is the first study to find the proper length of analytic periods that can be compatible with the hyperbolic discount method.

The purpose of this study is to investigate the effects of price discount frames and price discount levels on consumer perceptions about the quality of the service product, the value of the discount, their purchase intentions and their willingness to spread the word of mouth about the discount savings across different types of services.

The study uses an experiment design method using three interesting variables: discount format, discount level and service industry type. The experiment included four different types of low‐end price service levels: restaurants, hotels, mailing services, and retail services.

The findings indicate that price discount frames and discount levels do affect consumers' perceptions on the value of the discount, the quality of the service, their intention to purchase and their willingness to engage in WOM advertising.

The practical implication for service firms that want to use price discount promotions to encourage sales and increase revenue is that they should carefully consider the price range and the value or quality of image they intend to signal when using these different price discount frames and the service they are selling to determine the discount level to use.

This paper is valuable to low‐end service marketers that seek to use price discount promotions to encourage sales and increase revenue.