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Capital investments require balancing risk and return. Managers have a responsibility to ensure that the investments that they make in their own firms increase shareholder

Capital investments require balancing risk and return. Managers have a responsibility to ensure that the investments that they make in their own firms increase shareholder value. Managers have met that responsibility if the return on the capital investment:


Exceeds the rate of return associated with the firm’s beta factor.

Is less than the rate of return associated with the firm’s beta factor.

Is greater than the prime rate of return.

Is less than the prime rate of return

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