Thinking in terms of the goal of wealth maximization, a project breaks even for shareholders, meaning...

Thinking in terms of the goal of wealth maximization, a project breaks even for shareholders, meaning that it neither creates nor destroys value, if a) its NPV equals 0 b) its IRR equals 0 c) its net profit after taxes equals 0 d) its payback period is one year or less

Solutions

Expert Solution

Answer is Option a

Wealth is maximized by a project that offers the maximum NPV and hence adds maximum value to shareholders. A negative NPV project erodes value to shareholders. This implies, for the break-even point, NPV should be zero. At this point, investor would be in different between rejecting or accepting the project.

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

The goal of "maximization of the shareholders' wealth" is an adequate goal for a project. Do...

The goal of "maximization of the shareholders' wealth" is an adequate goal for a project. Do you agree? If you dont explain your justtification (please explain in detail)

The goal of “maximization of the shareholders’ wealth” is an adequate goal for a project. Do...

The goal of “maximization of the shareholders’ wealth” is an adequate goal for a project. Do you agree? If you don’t, explain your justification. Can you comment on this topic at least 5 pages on MS Word? Thanks.

The purpose of the financial management is to maximize shareholders wealth. What is the meaning of shareholders wealth maximization?

The purpose of the financial management is to maximize shareholders wealth. What is the meaning of shareholders wealth maximization? If a company attempts to maximize its shareholders wealth, is this good or bad for society? Explain by providing some examples. Do you think maximizing shareholders’ wealth also applies in Saudi Arabia?Search the SEU library or the Internet for an academic or industry-related article. Select an article that relates to these concepts and explain how it relates to doing business in...

The primary goal of finance in corporate organizations is the maximization of shareholders’ wealth.

The primary goal of finance in corporate organizations is the maximization of shareholders’ wealth. Using the balance sheet model of the firm, demonstrate how this goal can be achieved.

Why is wealth maximization used as the goal for financial decisions?

A major advantage of using the maximization of shareholder wealth as the primary goal of the...

A major advantage of using the maximization of shareholder wealth as the primary goal of the firm is that this goal considers the timing and the risk of the expected benefits to be received the investor's consumption utility the value of closely held partnerships all the above

Corporate Finance Overview along with the issues of Firm's goal - profit maximization vs. wealth maximization...

Corporate Finance Overview along with the issues of Firm's goal - profit maximization vs. wealth maximization and Agency issue.

Currently, maximization of shareholder wealth is widely accepted as the primary goal of management.

Chapter 1 Discussion: Primary Goal of ManagementCurrently, maximization of shareholder wealth is widely accepted as the primary goal of management. However, like most economic theories, certain conditions must exist in order for the theory to accomplish its potential . Now, compare the theoretical world with the real world--if you were in charge of management decisions, how might you balance the theory with reality?

Explain the concept of shareholder wealth maximization. Is there a conflict between the goal of shareholder...

Explain the concept of shareholder wealth maximization. Is there a conflict between the goal of shareholder wealth maximization and the financial manager's need to act in an ethical manner? Why or why not?

The purpose of the financial management is to maximize shareholders wealth. What is the meaning of...

Subjects