Contemporary Financial Management, Loose-leaf Version
Contemporary Financial Management, Loose-leaf Version
14th Edition
ISBN: 9781337090636
Author: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao
Publisher: South-Western College Pub
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Chapter 10, Problem 1QTD
Summary Introduction

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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