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Several financial maturity models are analysed to identify the key relationships, particular assumptions, and means of handling the time element. The correct model to employ depends upon a firm's ability to vary factors of production and on the accessibility of factor markets. A generalization of the Faustmann or soil-rent approach avoids implicit assumptions regarding land and capital market access. In addition to supporting adherents of the soil-rent model, the general solution illustrates the relationships between various theoretical approaches. The logical inconsistencies between the present net worth and the internal rate of return models is resolved by this comparison. Marginal conditions are defined for each approach, but no attempt is made to utilize them as operational decision-making aids. A tabular comparison of the models is included.
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Bentley et al. (1965) studied this question.
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