How does the NPV relate to the goal of maximizing shareholders wealth?

Would management pursue goals other than shareholder wealth maximization?

Of course yes, but maximizing shareholder wealth would be the primary goal of any organization that has shareholders.

Identify the various factors that can influence companys primary goal of maximizing shareholder wealth?

Identify the various factors that can influence a company's primary goal of maximizing shareholder wealth.

What is meant by the goal of maximization of shareholders wealth?

The goal of maximization of shareholder wealth is meant by; first, in most cases

Why is adjusting the WACC upwards consistent with the overall corporate goal of shareholder wealth maximization?

why? isn't it to adjust it downwards to max. shareholders wealth?

Goal of the firm?

profit maximization &wealth maximization of shareholders.

What is meant by the objective of Maximizing Shareholder Wealth as contrasted with the goal of maximizing short term profits?

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What is meant by the goal of maximization of shareholder wealth?

Suppose a stock holder buys a stock at $10 and in ten years time the market price of stock shoots up to $55. This is called maximizing shareholders capital. From Barry D. Maximizing Sharholder Wealth refers to the process by which executives in a pulically-owned company, usually, (but also to private companies with shareholders), undertake investing in new projects, maximizing profits from existing products and services, controlling costs, and adding "value" to the company through the process, which hopefully gets reflected in the price of the stock, but alwasy in the increase in Net Asset Value and Equity Per Share. Sometimes simply selling the company for a premium over the existing price or Asset Value results in Maximizing ShareholderWealth. Hope this helps, Barry

Why maximizing shareholers' wealth is always the goal of a firm instead of maximizing profits of the firm's?

The foundation of a firm is the investment, the wealth of its promoters and more importantly the share holders. Share holders have invested their money in the firm basing on the confidence they have on the firm and believing that their investment will be safe and will fetch good reasons. Once their trust is shaken, it will ruin the firm. On account of all these, the primary goal of a firm is to maximise the share holders' wealth.

Explain the rationale for selecting shareholders wealth maximizatio as the objective of the firm?

Explain the rationare for selecting shareholder wealth maximization as the objective of the firm.Include a consideration of profit maximization as an alternative goal

Why is shareholder wwealth maximization be a beter operating goal than profit maximization?

A firm's operating goal should be to maximize shareholder wealth as it is shareholders who are the owners of the firm. Profit maximizing however is more of a personal/management oriented type goal as it only benefits those running the company. This problem is known as the Agency issue, and it is directly related to the asymmetry of information problem that all firms suffer from. Typically, higher ranking persons in a company, usually managers, know a lot more about the firms operations than do subordinates and common stock holders; this information may be exploited so that only profits and managements' personal pay packets are maximized, and shareholders who funded the firms operations by their purchase of ordinary equity benefit none as they experience no gain through increase in share value. In order to overcome this issue, several things can be done. For example, monitoring techniques can be put in place to ensure management is acting in shareholder interest and not their own, or alternatively, management pay packets can be directly linked to the goal of maximizing shareholder wealth. If and when this goal is achieved and shareholders realize gains, management may be paid a cash bonus or an allotment of shares. Put simply, shareholder wealth maximization should be the firms operating goal simply because they are financing the firms operations with their investing in the firm; to act against their interests is unethical, but still not unheard of.

What conditions might concentration on a single business be inconsistent with the goal of maximizing stockholder wealth?

If the business has several different sidelines or sub-businesses, focusing on only one may be a fatal error for a manager.

For consumers most market activity can be explained by the goal of?

maximizing happiness