BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Profit Maximization
|
|
|
Wealth Maximization
|
|
|
Both Profit Maximization and Wealth Maximization
|
|
|
None of these
|
Detailed explanation-1: -It ignores the time value of money:Profit maximization does not consider the time value of money or the net present value of the cash inflow. It leads certain differences between the actual cash inflow and net present cash flow during a particular period.
Detailed explanation-2: -What is Profit Maximization? The process of increasing the profit earning capability of the company is referred to as Profit Maximization. It is mainly a short-term goal and is primarily restricted to the accounting analysis of the financial year. It ignores the risk and avoids the time value of money.
Detailed explanation-3: -The formula for computing the time value of money considers the amount of money, its future value, the amount it can earn, and the time frame. For savings accounts, the number of compounding periods is an important determinant as well.
Detailed explanation-4: -Ensuring excess availability of funds at the right time is not an objective of financial planning.