Maximizing Enterprise Value and Maximizing Shareholder Value Are Linked Because

question 60

Multiple Choice

Maximizing enterprise value and maximizing shareholder value are linked because:

• A)Enterprise value and shareholder value are the same thing
• B)Shareholder value is calculated by adding debt and other non-equity financial claims to the DCF value of the firm
• C)Shareholder value is calculated by subtracting debt and other non-equity financial claims from the enterprise value of the firm
• D)It's obvious that they must be linked.

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Definitions:

Economic Benefits

Benefits that can be quantified in monetary terms and usually include profits, revenues, and savings.

Future Cash Inflows

Expected receipts of cash in the future from investments, operations, or financing activities.

Asset's Value

The worth of an asset, calculated based on factors such as market value or depreciation.