Imagine that you are a divisional manager. Currently you are a member of a committee which is considering two product investments proposed by two other divisional managers: Joe and John. While walking over to the presentations, Joe seems rather arrogant. He mentions that he golfs with the CEO, is a key player in the firm, and that you could really learn a lot from him. In thinking over the projects after the presentations, you find you are really leaning toward John’s proposal even though the projects are quite similar in terms of estimated cash lows and risks. How can you explain this?
An example of a firm's financing decision would be: A. acquiring a competitive firm. B. determining how much to pay for a specific asset. C. issuing 10-year versus 20-year bonds. D. deciding whether or not to increase the price of its products.