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Capital Management and Securities

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1. What is the preferred method of ranking different capital projects? Why is it preferred?

2. What are the elements of working Capital management? What might you do as a manager to control each element?

3. Why would firms wish to hold cash and/or marketable securities?

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This solution answers questions regarding capital management and securities.

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Question 1
The preferred method of ranking projects is the net present value or NPV. The criteria for evaluating a capital project using NPV is that in mutually exclusive projects, all projects with positive NPV are accepted while given capital limitations only the highest projects are funded.
NPV is preferred ...

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