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?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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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