Given the Goal of Maximization of Firm Value and Shareholder

question 66

Essay

Given the goal of maximization of firm value and shareholder wealth,we have stressed the importance of net present value (NPV). And yet,many financial decision-makers at some of the most prominent firms in the world continue to use less desirable measures such as the payback period and the average accounting return (AAR). Why do you think this is the case?

---

Definitions:

Fluvial

Pertaining to rivers or streams, including the processes, sediment, resulting rock, and landforms.

Sediment

Particles of rock, soil, or organic material that are transported and deposited by wind, water, or ice.

Processes

The series of actions, changes, or functions that bring about a result or are involved in the way natural phenomena occur.

Sedimentary Rocks

Rocks formed by the accumulation and compression of sediment, which may include minerals, organic matter, and fragments of other rocks.