1) Given goals of firm value and shareholder wealth maximization, we have stressed significance of NPV. And thus, many financial decision-makers at some of most famous firms in world carry on using less desirable measures like payback period and AAR. Explain why do you think this is the case?
2) Write down the differences and similarities between NPV and PI.
3) You are starting the firm whose new gizmo product line will sell for $65 per unit. Operation Determine the break-even level of output.
4) Agency problems are said to be inborn in corporate form of the organization. Describe why do you think this is the case? Do you think agency problems occur in the sole proprietorship or a partnership? Write down steps that you would take to decrease agency problems in a so-called typical corporation?