When managers use NPV analysis, agency costs are eliminated, and governance is not needed to monitor MNC decisions regarding projects.

Question

Quizplus · Accepted Answer

While NPV analysis does take into account the cost of capital and potential cash flows, it cannot completely eliminate agency costs or negate the need for effective governance within an MNC. Governance is important to ensure that the managers are making decisions in the best interest of the company and its stakeholders, and to prevent potential conflicts of interest or unethical behavior.

When Managers Use NPV Analysis, Agency Costs Are Eliminated, and Governance