After reading the “Ethical Issues” box on page 330 of the required text, devise a plan that will minimize or reduce the impact of these cash flow estimation biases on effective decision-making.
The CFO of a firm you just started working for claims “we always have, and always will, use the weighted average cost of capital (WACC) as the rate to discount future expected cash flows from our proposed capital budgeting projects”. What do you think of this strategy?
