Problem
A. "Since capital budgeting decisions involve the estimation of a project's future cash flows and the rate at which they should be discounted is still a relatively subjective process, the behavioral traits of managers still affect this process." Discuss this statement and suggest how managers can better improve their ability to eliminate biases in their forecasting.
B. Discuss the merits of the following statement: Inside directors should constitute the majority of a corporate board, because insiders have superior understanding of the firm's business operations. What evidence can you cite in support or in opposition to this assertion?