PRIN.OF CORPORATE FINANCE
PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 5, Problem 18PS
Summary Introduction

To determine: Whether the net present value rule assume that cash flows are reinvested at the opportunity cost of capital.

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Skip Stephens is trying to decide whether it would be wise to consolidate his debt by borrowing funds from Syndicated Lending, a firm that he doesn’t know much about. Syndicated is an Internet lender that doesn’t post much information about the costs of the loans it offers. Some of the additional information Skip has gathered from various sources suggests the Syndicated might use such unethical practices as “bait and switch” to attract customers. Discussion questions: Is there an ethical problem? If so, what is it? What are the implications if Skip borrows from Syndicated? Should Skip borrow from Syndicated?
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