Capital Budgeting

To avoid damaging its market value, each company must use the correct discount rate to evaluate its projects. Review and discuss the following:

Q1 Compare and contrast the internal rate of return approach to the net present value approach. Which is better? Support your answer with well-reasoned arguments and examples.

Q2 Is the ultimate goal of most companies--maximizing the wealth of the owners for whom the firm is being operated--ethical? Why or why not?

Q3 Why might ethical companies benefit from a lower cost of capital than less ethical companies?