Analyze and discuss the following statements (Explain why you agree or disagree - Use a counterexample to disprove the statement if it is your final consideration).

1- "The discounted payback period guarantees that all the projects we accept will never have a negative Net Present Value (NPV), although we may reject a good project whose NPV is positive."

2-Modigliani and Miller completely ignore the fact that the higher the debt, the interest rate on it increases. Explain carefully if this objection is correct.

3- What is the difference between business risk and financial risk? How can they be measured in a market risk?

Answer rating: 100% (QA)

1 Discounted payback period takes into account the time value of money by using discounted cash inflows at a suitable discount rate to calculate the payback period in which investment would be recoupe... View the full answer