Profit maximization is not an adequate goal of the firm when making financial decisions because
A) it does not necessarily reflect shareholder wealth maximization.
B) it ignores the risk inherent in different projects that will generate the profits.
C) it ignores the timing of a project's returns.
D) all of the above are correct.

Question

Quizplus · Accepted Answer

Profit maximization alone does not consider the long-term interests of shareholders, ignores the risk involved in various projects, and does not consider the timing of returns. Therefore, it is not an appropriate goal for firms to make financial decisions.

Profit Maximization Is Not an Adequate Goal of the Firm