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A CFO says, In our company, shareholder value comes first. Therefore, for each project we consider, we calculate NPV (i.e., the present value of future
A CFO says, "In our company, shareholder value comes first. Therefore, for each project we consider, we calculate NPV (i.e., the present value of future cash flows minus the current cost of taking on the project), and we choose not to invest if the NPV is negative." Is the CFO's argument that maximizing shareholder value always implies passing up negative NPV projects correct? Justify your answer.
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