• ISSN: 2010-023X
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing: Engineering & Technology Digital Library, ProQuest, Crossref, Electronic Journals Library , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2014 Vol.5(1): 114-117 ISSN: 2010-023X
DOI: 10.7763/IJTEF.2014.V5.351

Conceptual Framework for Measurement and Application of Public Sector Opportunity Cost of Capital

Kaia Kask
Abstract—In this paper, a conceptual framework for the measurement and application of opportunity cost of capital for the public sector budgetary purposes is elaborated. The paper fills the gap to offer a structured overview of discount rate classifications discussed in literature, also how these discount rates are measured and finally applied to various long-term investment opportunities faced by the public sector. The final result should give the answer to the question, whether there should be used different discount rates to different public sector investment projects or maybe there is the one and the only universal discount rate applicable to all cases?

Index Terms—Public sector investment, opportunity cost of capital, social opportunity cost, social rate of time preference.

Kaia Kask is with the Faculty of Economics and Business Administration, the Institute of Finance, University of Tartu, Estonia (e-mail: kaia.kask@ut.ee).

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Cite:Kaia Kask, "Conceptual Framework for Measurement and Application of Public Sector Opportunity Cost of Capital," International Journal of Trade, Economics and Finance vol.5, no.1, pp. 114-117, 2014.

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