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.
E)None of the above.

Question

Quizplus · Accepted Answer

Growth can be reconciled with the goal of maximizing firm value because growth should be an outcome of decisions that maximize net present value (NPV). A firm should only pursue growth that adds value, i.e. where the benefits of growth exceed the costs. Therefore, growth that increases the value of the firm can be reconciled with the goal of maximizing firm value.

Growth Can Be Reconciled with the Goal of Maximizing Firm