Which of the following is the overriding goal of corporate financial managers? A

Question

Which of the following is the overriding goal of corporate financial managers?

A. maximizing the price per share of the common stock

B. maximize profits

C. maximize sales

D. maximize market share

Which of the following statement is true?

A. the discounting process adds the intrest part to the present value.

B. the time ine for a lender of $1,000 for one year at a rate of 8% compounded annually would include a negative cash flow of $1,080 at the end of year 1

C. the formula for the future value of a perpetunity is useful when solving for the savings needed to reach a targeted retirement amount.

D. the formula for the presen value of an annuity would give us the value at the end of year 3 for an annuity with a first payment that occurs at the end of year 4

Explanation / Answer

Correct option B. Maximize profits

A is not apt because increase in stock prices may be due to sentiments too
C is not apt as sales increase may not result in increased profits
D is also not apt as increase in market share is based on sale which does not translate into increased profits.

Correct option:

D. the formula for the presen value of an annuity would give us the value at the end of year 3 for an annuity with a first payment that occurs at the end of year 4

A is incorrect because discounting removes interest when it is carried out
B is wrong because the signs of cash flows should be opposite
C is wrong because it shall use future value of annuity and not perpetuity

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