9780321818171_berk_ch03

Key points and equations terms 31 managerial decision

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Unformatted text preview: reading this chapter. MyFinanceLab will help you identify what you know, and where to go when you need to practice. Key Points and Equations Terms 3.1 Managerial Decision Making ◗ To evaluate a decision, we must value the incremental costs and benefits associated with that decision. A good decision is one for which the value of the benefits exceeds the value of the costs. MyFinanceLab Study Plan 3.1 3.2 Cost-Benefit Analysis ◗ To compare costs and benefits that occur at different points in time, we must put all costs and benefits in common terms. Typically, we convert costs and benefits into cash today. 3.3 Valuation Principle ◗ A competitive market is one in which a good can be bought and sold at the same price. We use prices from competitive markets to determine the cash value of a good. ◗ The Valuation Principle states that the value of a commodity or an asset to the firm or its investors is determined by its competitive market price. The benefits and costs of a decision should be evaluated using those market price...
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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 Arizona.

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