Respond in a complete paragraph for each of the four questions: 1. The NPV decision rule: And how it relates to the goal of maximizing shareholders’ wealth. The NPV decision rule has to do with dealing with risks. This gives the financial manager a feel for project risk in the firm…
(NPV) when used, the projected cash inflow discounted at the risk-adjusted discount rate (Gitman, 2009). The (NPV) decision rule, says that acceptance of projects, only the projects with NPVs>$0; for example will qualify. If the initial investment (CF0) is known with absolute certainty, the project risk is in the present value of it cash inflows. Two opportunities to adjust the present value of cash inflows for risk recognized today (Gitman, 2009). cash inflows or (CFt) can be adjusted the discount rate (r) can be more popular a process of adjusting the discount rate When determined, the portfolio effects of project analysis and the practical aspects of risk-adjusted discount rate. This is because adjusting the cash inflows is highly subjective. The most popular process is the risk-adjusted discount rate. If NPV > zero ...
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(Coursework 2 Example | Topics and Well Written Essays - 250 Words)
“Coursework 2 Example | Topics and Well Written Essays - 250 Words”, n.d. https://studentshare.net/other/27986-coursework.
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