In order to maximize firm value, management should invest in - 1649

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In order to maximize firm value, management should invest in new assets when the internal rate of return is:

          a.   greater or equal to the firm’s marginal cost of capital.

          b.   greater than the cost of debt financing.

          c.   less than or equal to the accounting rate of return.

          d.   less than or equal to the firm’s marginal cost of capital.

Solution Description

In order to maximize firm value, management should invest in new assets when the internal rate of return is: