Growth can be reconciled with the goal of maximizing firm value:
A) because greater growth always adds to value.
B) because growth must be an outcome of decisions that maximize NPV.
C) because growth and wealth maximization are the same.
D) because growth of any type cannot decrease value.

Question

Quizplus · Accepted Answer

Growth contributes to maximizing firm value when it is the result of decisions that maximize the Net Present Value (NPV) of investments. This means that growth should be pursued only when it adds more value than it costs, ensuring that the firm's value is maximized. Choices A, C, and D are incorrect because growth does not always add to value, growth and wealth maximization are not inherently the same, and not all types of growth will increase a firm's value.

Growth Can Be Reconciled with the Goal of Maximizing Firm