Given our goals of firm value and shareholder wealth maximization, we have stressed the importance of NPV. Yet many financial decision makers at well-known firms continue to use less desirable measures (such as payback period) rather than more desirable measures (such as payback period and AAR, in addition to the NPV and IRR). Why do you think this is the case?
Given our goals of firm value and shareholder wealth maximization, we have stressed the importance of NPV. Yet many financial decision makers at well-known firms continue to use less desirable measures (such as payback period) rather than more desirable measures (such as payback period and AAR, in addition to the NPV and IRR). Why do you think this is the case?
Chapter1: The Role And Objective Of Financial Management
Section: Chapter Questions
Problem 5QTD
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In a few sentences, answer the following question as completely as you can.
- Given our goals of firm value and shareholder wealth maximization, we have stressed the importance of NPV. Yet many financial decision makers at well-known firms continue to use less desirable measures (such as payback period) rather than more desirable measures (such as payback period and AAR, in addition to the NPV and IRR).
Why do you think this is the case?
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