8th Edition

ISBN: 9781259903175

Author: Ross

Publisher: MCG CUSTOM

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Textbook Question

Chapter 9, Problem 4CTCR

Stand-Alone Principle. Suppose a financial manager is quoted as saying, “Our firm uses the stand-alone principle. Because we treat projects like minifirms in our evaluation process, we include financing costs because they are relevant at the firm level.” Critically evaluate this statement.

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Chapter 9, Problem 3CTCR

Chapter 9, Problem 5CTCR

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Chapter 9 Solutions

ESSENTIAL OF CORP FINANCE W/CONNECT

Ch. 9.1 - Prob. 9.1ACQ Ch. 9.1 - What is the stand-alone principle?Ch. 9.2 - Prob. 9.2ACQ Ch. 9.2 - Prob. 9.2BCQ Ch. 9.2 - Explain why interest paid is not a relevant cash...Ch. 9.3 - What is the definition of project operating cash...Ch. 9.3 - In the shark attractant project, why did we add...Ch. 9.3 - Prob. 9.3CCQ Ch. 9.4 - Prob. 9.4ACQ Ch. 9.4 - How is depreciation calculated for fixed assets...

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Stand-Alone Principle. Suppose a financial manager is quoted as saying, “Our firm uses the stand-alone principle. Because we treat projects like minifirms in our evaluation process, we include financing costs because they are relevant at the firm level.” Critically evaluate this statement.

Solution Summary: The author explains the stand-alone principle, which assumes that project evaluation may be based on incremental cash flow of the project.

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Chapter 9 Solutions