FIN-450 Week 2 DQ 2- A corporation’s policy manual states: "Our company’s policy is to use 12%,…
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FIN-450 Week 2 DQ 2
Intermediate Finance - Financial Performance, Planning, and Forecasting
Grand Canyon University
A corporation’s policy manual states: "Our company’s policy is to use 12%, which is our cost of capital, as the discount rate for NPV calculations on all projects considered for investment." What is wrong with this policy? In what types of projects will this company overinvest? In what types of projects will it underinvest?