Why is the personal decision a financial manager makes as to whether to buy or to rent an apartment as a personal residence most like the professional decision that manager makes as to whether her firm should try to acquire a stake in a fast growing new Internet-based company?
A) Both decisions involve the purchase of assets that are essential for the existence of the investor.
B) Both decisions involve the rental of a useful asset.
C) Both decisions have the potential to affect the firm.
D) Both decisions should be made based upon the tradeoff benefits and costs across time.

Question

Quizplus · Accepted Answer

Both decisions involve evaluating the benefits and costs over time. In the personal decision of buying or renting an apartment, it is important to consider the long-term financial implications of owning versus renting. Similarly, when a financial manager considers whether her firm should acquire a stake in a new Internet-based company, she needs to evaluate the long-term potential benefits and costs of the investment. Therefore, both decisions require assessing the tradeoff between benefits and costs across time.

Why Is the Personal Decision a Financial Manager Makes as to Whether