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    Question

    The 'Wealth Maximization' objective of financial

    management is considered superior to 'Profit Maximization' because it considers:
    A Only the current year's earnings. Correct Answer Incorrect Answer
    B The timing of cash flows and the risk associated with the firm. Correct Answer Incorrect Answer
    C The book value of assets. Correct Answer Incorrect Answer
    D The accounting profits as per the P&L statement. Correct Answer Incorrect Answer

    Solution

    Wealth Maximization focuses on maximizing the market value of the company's shares. This considers the long-term prospects, the timing of expected returns (time value of money), and the risk associated with future cash flows, making it a more comprehensive goal than simply maximizing accounting profits.

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