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Subject 3. Investment Decision Criteria he project's cash flows are just sufficient to repay the invested capital and to provide the required rate of return on that capital. If a firm takes on a project with a positive NPV, the position of the stockholders is improved.
The higher the NPV, the better. Reject if NPV is less than or equal to 0.
NPV measures the dollar benefit of the project to shareholders. However, it does not measure the rate of return of the project, and thus cannot provide "safety margin&
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