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Different Risk-profile - Shareholders and Management
Shareholders will generally prefer high-risk-high return investments while they are diversified that is they have many investments and the collapse of one firm may have irrelevant effects upon their overall wealth.
Managers on the other hand, will prefer low risk-low return investment because they have a personal fear of losing their jobs whether the projects collapse. Like human capital is not diversifiable. This dissimilarity in risk profile is a cause of conflict of interest while shareholders will forego some profits whenever low-return projects are undertaken.
Credit Standards A firm may follow a stringent or a lenient credit policy. The firm subsequent of a lenient credit policy tends to sell on credit to customers on extremely lib
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Example of Dividend Basis Valuation Company Laxmi Synthetics pays a dividend of 10% on its Sh.60 par value ordinary shares. This company uses a discount rate of 15%. A
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Significance of Investment Decisions a) Such type of decisions is importance since they will influence the company's size or like fixed assets, retained and sales earnings.
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Please list five common mistakes in capital budgeting that could either overstate or understate the value of a project.Bonus: explain the relationship between the errors above and
Instructions: Read the Herzberg findings related to extrinsic and intrinsic factors driving job satisfaction, dissatisfaction and motivation. To what extent should employers feel r
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