Draw and label the basic valuation model

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1. Explain why managers can use the payback approach to advance their own interests at the expense of the stockholders.

2. Draw and label the basic valuation model using the correct names.

3. What is the approximate present value of $1,000 to be received each year for 15 years assuming a discount rate of 10%?

4. Explain why you would not accept a project with an NPV of -$20. Explain the relevant aspects of the NPV calculation.

5. At what annual interest? rate, compounded? annually, would $490 have to be invested for it to grow to $1,966.07 in 15 years?

Reference no: EM131990667

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