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Broderick Inc. finances its activities with debt costing 6% and equity costing 12%. Broderick conld bortion additional funds at 6% if needed. Parker, a financial

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Broderick Inc. finances its activities with debt costing 6% and equity costing 12%. Broderick conld bortion additional funds at 6% if needed. Parker, a financial analyst at the frrm, argues that the frrm should undertake only those investments that earn a return of at least 12% because only those investments will increave shareholder value. If a firm decides to make investments based on this logic it will decline to make investments that it should undertake undertake investments that it should decline make only those investment decisions that increase shareholder value maximize its stock price

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