The changing definition of corporate governance has shifted since the early 1900s to go beyond _____________
a. the twin goals of social justice and profit maximization.
b. the singular goal to maximize profits.
c. satisfy stakeholders.
d. national market domination.
b. the singular goal to maximize profits.
You might also like to view...
If damage to leased property arises through no fault of the tenant, that tenant still has a duty to take interim steps in order to prevent further damage from the elements.
Answer the following statement true (T) or false (F)
Which of the following best describes the internal rate of return?
A) interest rate that makes the net present value of the investment equal to zero B) discount rate that is used to evaluate funds borrowed from a lender for profitability C) the ratio of average annual income to average amount invested D) the rate at which the profitability of an investment increases
Because of the complexity of federal securities laws, a recognized defense to a charge of violation of federal securities laws is ignorance of the specific law or laws involved
a. True b. False Indicate whether the statement is true or false
You are on the staff of Camden Inc. The CFO believes project acceptance should be based on the NPV, but Steve Camden, the president, insists that no project should be accepted unless its IRR exceeds the project's risk-adjusted WACC. Now you must make a recommendation on a project that has a cost of $15,000 and two cash flows: $110,000 at the end of Year 1 and -$100,000 at the end of Year 2. The president and the CFO both agree that the appropriate WACC for this project is 10%. At 10%, the NPV is $2,355.37, but you find two IRRs, one at 6.33% and one at 527.01%, and a MIRR of 11.32%. Which of the following statements best describes your optimal recommendation, i.e., the analysis and recommendation that is best for the company and least likely to get you in trouble with either the CFO or
the president? A. You should recommend that the project be rejected because its NPV is negative and its IRR is less than the WACC. B. You should recommend that the project be rejected because, although its NPV is positive, it has an IRR that is less than the WACC. C. You should recommend that the project be accepted because (1) its NPV is positive and (2) although it has two IRRs, in this case it would be better to focus on the MIRR, which exceeds the WACC. You should explain this to the president and tell him that that the firm's value will increase if the project is accepted. D. You should recommend that the project be rejected because (1) its NPV is positive and (2) it has two IRRs, one of which is less than the WACC, which indicates that the firm's value will decline if the project is accepted. E. You should recommend that the project be rejected because, although its NPV is positive, its MIRR is less than the WACC, and that indicates that the firm's value will decline if it is accepted.