New study reveals hidden costs in capital budgeting decisions.
The article discusses how traditional methods of making financial decisions may not always consider all the factors that can affect a company's success. One important factor that is often overlooked is the changing cost of capital, which can impact the profitability of investment decisions. By not taking this into account, companies may make mistakes in choosing which projects to invest in, leading to potential financial losses. It is crucial for managers to understand the implications of non-constant marginal cost of capital in order to make informed and successful business decisions.