NPV and an efficient market question
Hi everyone,
I'm doing some reading into using NPV as a basis for assessment of a project. Assuming that capital markets are efficient, why should NPV result in the maximisation of corporate value?
I know an assumption of NPV is that cash flows are reinvested at the cost of capital, but i'm not sure how this links to market efficiency? Unless it has something to do with allocational or operational efficiencies?
Any help or advice would be great
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