how does the net present value decision rule relate to the primary goal of financial management, which is creating wealth for shareholders?
Answered Essay: how does the net present value decision rule relate to the primary goal of financial
Expert Answer
The NPV rule states that a project should be accepted if the NPV is positive and rejected if theNPV is negative. This aligns with the goal of creating wealth for a firm’s shareholders as onlyprojects which create wealth are approved for acceptance. Managers are indifferent to projectswith zero NPVs, which is okay because such projects neither create nor destroy shareholder wealth
