This preview shows page 1. Sign up to view the full content.
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...
View Full Document
This note was uploaded on 02/07/2014 for the course MIS 304 taught by Professor Mejias during the Spring '07 term at Arizona.
- Spring '07