Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many longterm investment projects declines over time.

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Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

Although there is no empirical evidence to strongly support this hypothesis, some financial journalists have claimed that American managers are shortsighted and overly risk-averse, preferring to take on relatively safe projects that pay off quickly instead of taking on longer-term projects with less certain payoffs. Assume the journalists are correct.

a. Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

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b. Discuss how the presence of strategic investment options affects the decisions to adopt long-term over short-term investments.

Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

Explain why managers who use a single discount rate for valuing projects are likely to have a systematic bias against longer-term projects if the systematic risk of the cash flows of many long-term investment projects declines over time.

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