9780321818171_berk_ch03

As we emphasized earlier whether this opportunity is

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Unformatted text preview: traumatic Titanic memories, you should still take the opportunity to get the Celine Dion tickets. As we emphasized earlier, whether this opportunity is attractive depends on its net value using market prices. Because the value of the Celine Dion tickets is $40 more than the value of the Justin Bieber tickets, the opportunity is appealing. Once we use market prices to evaluate the costs and benefits of a decision in terms of cash today, it is then a simple matter to determine the best decision for the firm. The best decision makes the firm and its investors wealthier, because the value of its benefits exceeds the value of its costs. We call this idea the Valuation Principle: valuation principle The value of a commodity or an asset to the firm or its investors is determined by its competitive market price. The Valuation Principle: The value of a commodity or an asset to the firm or its investors is determined by its competitive market price. The Valuation Principle provides the basis for decision making throughout this text. In the remainder of this chapter, we first apply it to decisions whose costs and benefits occur at diffe...
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This note was uploaded on 02/07/2014 for the course MIS 304 taught by Professor Mejias during the Spring '07 term at University of Arizona- Tucson.

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