A Financial Manager Must Choose Between Four Alternative Assets: 1,2,3,and

question 57

Multiple Choice

A financial manager must choose between four alternative Assets: 1,2,3,and 4.Each asset costs $35,000 and is expected to provide earnings over a three-year period as described below. Based on the wealth maximization goal,the financial manager would choose ________.

• A) Asset 1
• B) Asset 2
• C) Asset 3
• D) Asset 4

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Definitions:

Profitability

The state of yielding financial gain or profit from business activities.

Organizational Effectiveness

The degree to which an organization achieves its goals and objectives through the efficient use of resources.

Span of Control

The number of subordinates a manager or supervisor can effectively manage and control.

Administrative Costs

Expenses associated with daily operations of managing a business or organization, including office supplies, salaries of non-production staff, and utilities.