In order to maximize shareholder wealth,a firm must consider historical costs as an integral part of their decision-making.

Question

Quizplus · Accepted Answer

In order to maximize shareholder wealth, a firm should focus on the future cash flows generated by potential investments, rather than historical costs. Historical costs may not accurately reflect the current value or potential future value of an asset or investment opportunity. Therefore, firms should use techniques such as net present value (NPV) or internal rate of return (IRR) to evaluate potential investments based on their expected future cash flows.

In Order to Maximize Shareholder Wealth,a Firm Must Consider Historical