Which One of the Following Actions Best Meets the Goal

question 102

Multiple Choice

Which one of the following actions best meets the goal of financial management?

• A) Deciding a firm should be 100% equity financed.
• B) Delaying cash payments to increase the total cash on hand.
• C) Easing the accounts receivable policies to increase current sales.
• D) Accepting a project that enhances the current market value of the firm's stock.
• E) Issuing additional shares of stock to increase the total cash on hand.

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Definitions:

Future Self

The concept of envisioning oneself in the future, often used in psychology and financial planning to motivate current actions that benefit one's future.

Precommitments

Actions or commitments made in advance to strategically constrain one's future actions or choices, often used to achieve a desired outcome.

Utility Maximization

The principle that individuals or firms aim to achieve the highest level of satisfaction or benefit from their choices, given their resources.

Opportunity Cost

is the value of the best alternative forgone when a choice is made between competing options, representing the trade-offs associated with every decision.