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Written by:
Anne L
Date added:
September 8, 2014
Level:
University
Grade:
B
No of pages / words:
11 / 2852
Was viewed:
7348 times
Rating of current essay:
Essay content:
Goal of the firm
A. In this book we will designate maximization of shareholder wealth, by which we mean maximization of the total market value of the firm's common stock, to be the goal of the firm. To understand this goal and its inclusive nature it is first necessary to understand the difficulties involved with the frequently suggested goal of profit maximization...
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While the goal of profit maximization stresses the efficient use of capital resources, it assumes away many of the complexities of the real world and for this reason is unacceptable.
1. One of the major criticisms of profit maximization is that it assumes away uncertainty of returns. That is, projects are compared by examining their expected values or weighted average profit...
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