3. Profit maximization is not wealth maximization –
Discuss briefly by giving appropriate examples.
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Answer Posted / francesco russo
In a world without growth opportunities, where the
cash-flows of the firm are generated only by exogenously
given assets in place, profit maximization should be the
same as shareholder's wealth maximization.
In a more realistic world (with growth opportunities and
where assets in place are endogenous), they could differ, as
correctly pointed out by Vipin Bhardwaj in one of the answers.
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