Simplified Mathematical Model of Long-Term Investment Values

Presented here are simplified mathematical models to evaluate the long-term investment values. A framework of the single product economy is used, which clarifies conceptual explanation. The short-term effects are mostly discarded and focus is done on the long-term economic trends. Two models are examined. The first model estimates an equity value for the stable earnings. The second model assesses an equity value for the unstable earnings with instability caused by the capital investments.