Profit maximisation is not an adequate goal of the firm when making financial decisions because
A)it does not necessarily reflect shareholder wealth maximisation.
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 maximisation alone is not an adequate goal of the firm when making financial decisions because it does not necessarily reflect shareholder wealth maximisation. Additionally, profit maximisation alone ignores the risk inherent in different projects that will generate the profits, as well as the timing of a project's returns. Therefore, all of the above options are correct.

Profit Maximisation Is Not an Adequate Goal of the Firm