3. Profit maximization is not wealth maximization –
Discuss briefly by giving appropriate examples.
Answer Posted / francesco russo
In a world without growth opportunities, where the
cash-flows of the firm are generated only by exogenously
given assets in place, profit maximization should be the
same as shareholder's wealth maximization.
In a more realistic world (with growth opportunities and
where assets in place are endogenous), they could differ, as
correctly pointed out by Vipin Bhardwaj in one of the answers.
Is This Answer Correct ? | 3 Yes | 0 No |
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