Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
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Question
Chapter 1, Problem 9DQ
Summary Introduction
To explain: The reason that profit maximization inappropriate as well as the meaning of wealth maximization.
Introduction:
Profit maximization:
It refers to a situation in which the firm wants to attain a certain level of output with a given level of input that may lead to the maximum level of profits.
Wealth maximization:
It is a concept that focuses on the overall development of the business and not just increasing the level of profit.
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