Describe the Goal of Financial Management and Give an Example

question 209

Essay

Describe the goal of financial management and give an example of a management compensation program which is designed to encourage managers to adhere to that goal.

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Definitions:

Income Taxes

Taxes levied by a government directly on income, especially an annual tax on personal or corporate earnings.

Sunk Costs

Sunk costs are expenses that have already been incurred and cannot be recovered.

Opportunity Costs

The forfeiture of possible benefits from different options when selecting one option over the others.

Terminal Cash Flow

The net cash flow received or paid at the end of a project's life, including salvage value and net working capital recovery.