Profit Maximization and Value of the Firm Are Two Concepts

question 1

Multiple Choice

Profit maximization and value of the firm are two concepts which are:

• A)Unrelated because cash flow is only one component of the firm's value
• B)Closely linked because profit maximization translates into maximizing the firm's value
• C)Unrelated because Net Present Value is used to assess the value of the firm
• D)Closely linked because the value of a firm is the sum of its free cash flows in each year discounted at the firm's interest rate

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