Shareholders' wealth maximization - Objectives of Business Entity
Shareholders' wealth maximization refers to maximization of the total present value of each decision made in the firm. Net current value is identical to the difference among the present value of benefits received from a decision and the present value of the price of the decision.
A financial action along with a positive net present value will maximize the wealth of the shareholders, at the same time as a decision along with a negative net present value will deduct the wealth of the shareholders. Below this goal, a firm will just take those decisions such result in a positive net present value.
Shareholder wealth maximization assists to solve the problems with profit maximization. This is since, the goal as: