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1. In what way is the NPV consistent with the principle of shareholder wealth maximization? What happens to the value of a firm if a positive NPV project is accepted? If a negative NPV project is accepted?

2. Can you name some industries where the payback period is unavoidably long?

3. What are the potential faults in using the IRR as a capital budgeting technique? Given these faults, why is this technique so popular among corporate managers?

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