A financial manager is considering two projects,A and B; both are expected to add $5 million to profits.Project A is expected to add $5 million to profits this year,while Project B is expected to add $1 million to profits each year over the next five years.Which of the following statements is MOST correct?
A) The manager should select Project A because it maximizes profits.
B) The manager should select the project that maximizes long-term profits,not just one year of profits.
C) The manager should select Project A,of course.
D) The manager should select the project that causes shareholder wealth to increase the most,which could be A or B.
Correct Answer:
Verified
Q2: Profit maximization is NOT an adequate goal
Q3: The creation of value:
A)implies that one firm
Q4: Which of the following goals of the
Q5: Determining the best way to raise money
Q6: The cash flow cycle:
A)describes the flow of
Q7: The creation of value is driven by
Q8: Which of the following goals are in
Q9: Financing activities are concerned with:
A)determining whether a
Q10: The financial manager is involved in these
Q23: Do corporate decisions that increase the value
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