Abstract

This paper analyzed the most disputed issue on the economically optimal size design of the size-variable projects. The paper confirms that the concept that the size at which the NPV of the size-variable project getting its maximum value is the economically optimal size is incorrect and that the size is the maximum size rather than the economically optimal one. The economically optimal size can be only restricted within the range in which NPV & NPVR get their maximum value respectively as its upper and lower limits, and the economically optimal size within the range can only be worked out according to the concrete case. Two kinds of different models optimizing the size of the size-variable projects are set up in the paper.

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