CONTEMP.FINANCIAL MGMT. (LL)-W/MINDTAP
CONTEMP.FINANCIAL MGMT. (LL)-W/MINDTAP
14th Edition
ISBN: 9780357292877
Author: MOYER
Publisher: CENGAGE L
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Chapter 10, Problem 1QTD
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To discuss: The way net present value approach complement with the goal of optimizing the wealth of shareholders.

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Explanation of Solution

The net present value approach measures the present values of benefits of a project over its costs, calculated by using cost of capital of the company. When a project has a positive NPV, it means that, investors earning minimum rate of returns that are determined by cost of capital of the company and something additional is being received.

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