Q1. Given the goal of maximization of firm value and shareholder wealth, we have stressed the importance of net present value (NPV). Yet many financial decision-makers at some of the most prominent firms in the world continue to use less desirable measures such as the payback period and the average accounting return (AAR). Why do you think this is the case?
Q2 the inverse market demand function is given by p=20-y. would consumers prefer to face a monopolist in this market with a cost function given by c=4+2y, or a perfectly competitive firm with a cost function given by c=10y?