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Profit maximisation criterion
Profit maximisation criterion is unsuitable and inappropriate as an operational objective of financing, investment and dividend decisions of a firm. It isn't only vague and time value of money. It follows from the above that a suitable operational decision criterion for financial management should
(i) be exact andprecise,
(ii) be based on "bigger the better" principal,
(iii) consider both quantity and quantity dimensions of benefits
(iv) recognise the time value of money. Alternative to profit maximisation that is wealth maximisation is one such measure.
The Beta Corporation has an optimal debt ratio of 40%. Its cost of equity capital is 12% and its before-tax borrowing rate is 8%. Given a marginal tax rate of 35%, calculate (
Enumerate the Internal development of any business or 'organic growth' Business grows using its own internal resources. - Reduces risk of the high cost of integrating cultur
Illustration Discount bond (5 yr. bond with 10% coupon) (expected rate yield at 12%) Premium bo
We can measure the convexity with the help of following formula: ...Eq. (4) Where, Δ
Question: (a) Consider that rate of interest is 10% and you are offered either a discount bond paying you $5,000 in 5 years or a fixed-payment loan paying you $750 per year for
Functions of Financial Management Traditional function of financial management has been limiting the role of finance toraising and administrating of funds required by the compa
er diagram
If invested 2500 in a bank that pays 1% annually. How long will it take for the funds to double?
Source documents of an accounting system: Source documents are those documents that identify the particular transaction that is being recorded. They act as an internal control
The difference between the cost of attending a particular school and the expected family contribution, minus any other financial aid.
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