Shareholders'' wealth maximization, Financial Management

Assignment Help:

Shareholders' wealth maximization

Shareholders' wealth maximization refers to maximization of the net present value of every decision made in the firm. Total present value is equivalent to the difference among the current value of advantages received from a decision and the current value of the cost of the decision.

The financial action with a positive total current value will maximize the wealth of the shareholders, whereas a decision with a negative total present value will decrease the wealth of the shareholders. Beneath this aim, a firm will only take those decisions that outcome in a positive net present value.

Shareholder wealth maximization aids to resolve the troubles with profit maximization. This is since, the goal:

  • Considers time value of money by concession the probable future cash flows to the present.
  • It identifies risk by using a discount rate (that is a measure of risk) to concession the cash flows to the present.

 


Related Discussions:- Shareholders'' wealth maximization

What do you mean by gross working capital, Q. What do you mean by Gross wor...

Q. What do you mean by Gross working capital? Gross working capital: - Gross working capital demotes to firms investment in current assets. Current assets are the assets which

Regular payback period, The director of capital budgeting for a firm has re...

The director of capital budgeting for a firm has recognized two mutually exclusive projects, A and B, with the following expected net cash flows:

Yield on treasury bills, Treasury Bills, popularly known as T-bills, ...

Treasury Bills, popularly known as T-bills, are issued in India by the RBI on behalf of the Government of India. T-bills are short-term securities with a maturity of 91

Weighted-average cost of capital, A Company has the following capital struc...

A Company has the following capital structure: Debt: $2,000,000 Preferred: $1,000,000 Common: $4,000,000 Retained Earnings: $3,000,000 The amounts shown gives book values.  The m

Core Concepts, Do you have Textbook solutions for Financial Management Core...

Do you have Textbook solutions for Financial Management Core Concepts Author: Raymond M. Brooks. ISBN 978-0-13-267103-3.

CASELET, Prepare your recommendation on Agarwal Cast Company

Prepare your recommendation on Agarwal Cast Company

Fraud and society and analytical techniques, Fraud and Society and Analytic...

Fraud and Society and Analytical Techniques: Fraud and Society - The effects and financial consequences of fraud in society including the individual, older people, financial

Leverages, Leverages 'Leverages' are of prime importance in the analysi...

Leverages 'Leverages' are of prime importance in the analysis of a companies' risk. They give a good picture of the business, financial and the overall risk of a company's oper

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd