Optimal project selection when borrowing and lending rates differ

Mathematical programming is employed to obtain an optimal decision rule for project approval in capital budgeting in a nonperfect capital market. We use the framework due to Martin Weingartner to formulate the decision problem in a deterministic setting and derive the optimal rules for the acceptance/rejection of a single project explicitly in the two cases where the borrowing/lending rates for capital are constant and time-dependent, respectively.