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Tags
#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Question

NPV Decision rules:

  • The [...] the better.
  • Reject if [...]
Answer
higher the NPV,

NPV is less than or equal to 0.

Tags
#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Question

NPV Decision rules:

  • The [...] the better.
  • Reject if [...]
Answer
?

Tags
#analyst-notes #cfa-level-1 #corporate-finance #reading-35-capital-budgeting #study-session-10
Question

NPV Decision rules:

  • The [...] the better.
  • Reject if [...]
Answer
higher the NPV,

NPV is less than or equal to 0.
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Decision rules: The higher the NPV, the better. Reject if NPV is less than or equal to 0.

Original toplevel document

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. <span>Decision rules: 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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