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Suppose your firm is going to finance a new investment project with only retained earnings. The manager claims that since the earnings are already being
Suppose your firm is going to finance a new investment project with only retained earnings. The
manager claims that since the earnings are already being retained and that since no outside financing
is required, the project should be evaluated at the risk-free rate of return. Is this appropriate? Are
retained earnings risk-free? Why or why not?
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Investment Analysis And Portfolio Management
Authors: Frank K. Reilly, Peggy L. Hedges, Philip Chang, Keith C. Brown, Hedges Reilly Brown
1st Canadian Edition
0176500693, 978-0176500696
