In terms of the decision of what to do with extra cash, the firm's managers should undertake projects only if:
A) the firm never pays a dividend.
B) the expected return on the project is greater than that of an asset of similar risk.
C) the expected return on the project is less than that of an asset of similar risk.
D) the expected return on the project is equal to that of an asset of similar risk.

Question

Quizplus · Accepted Answer

The correct decision for a firm's managers when deciding what to do with extra cash is to undertake projects only if the expected return on the project is greater than that of an asset of similar risk. This ensures that the firm is investing in projects that are expected to generate higher returns compared to other investments with similar risk levels, thereby maximizing shareholder value.

In Terms of the Decision of What to Do with Extra