If NPVa . 0 then W3 . W1 and W4 . W1, but if tp , tc it may be true that W2 , W1. Consequently, if the corporation wants to avoid accepting projects that some of its shareholders might find unacceptable, it can only use NPVa if it always
borrows against future investment payoffs and pays out the proceeds as current dividends, i.e. if NPVa is used, then the corporation’s investment and borrowing/dividend policies become unavoidably intertwined.