u7 finance - When evaluating a project the decision maker...

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Hello class and Professor, Weighted average cost of capital plays an important role. Calculating the net present value is an important task since it allows the decision maker to make sound investment decisions. If the net present value of a project is positive, then the project is profitable and should be taken, but if the project has a negative net present value, then the project should not be considered.
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Unformatted text preview: When evaluating a project, the decision maker is making an investment decision with the goal of maximizing shareholders wealth. But the investment money does not come from one source. Each of such sources has its own cost, and this cost is the return required by each state general worth of the firm, the financial manager should base his analysis on the weighted average of all such costs. ....
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