What Modigliani and Miller's paper taught Treynor to do, in other words, was to look outside the corporation to the capital markets in order to solve problems in decision making like the choice of discount rate to use in making investment decisions. Mathematically, Treynor based his analysis "on the kind of work that I had seen the senior guys doing in the operations research group" of Arthur D. Little: they would first "try to solve the problem for a single [time] period ... drive that ... solution to an infinitesimally small time period, turn it into a partial differential equation and then integrate that thing out over finite time" (Treynor interview).

Donald MacKenzie, An Engine, Not a Camera, loc. 565