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What is the primary goal of financial management? Question 11 Not yet answered Marked out of 2.00 P Flag question a. Maximizing profits b. Minimizing costs c. Maximizing shareholder wealth d. Achieving market dominance How does the time value of money affect financial decision-making? a. It emphasizes the importance of immediate consumption Querion 12 b. It highlights the potential for future returns on investment c. It reduces the significance of inflation in financial calculations d. It discourages long-term financial planning

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Dustin

Expert · 2.1k answers · 2k people helped

Solution By Steps

Step 1: Identify the Primary Goal of Financial Management

The primary goal of financial management is to maximize shareholder wealth, which involves making decisions that increase the value of the company’s stock. This is achieved through strategic investment and operational decisions that enhance long-term profitability and financial stability.

Step 2: Understand the Impact of Time Value of Money on Financial Decision-Making

The time value of money affects financial decision-making by highlighting the potential for future returns on investment. It recognizes that a dollar received today is worth more than a dollar received in the future due to the potential earning capacity of the money if invested. This concept is crucial in evaluating investment opportunities, loan repayments, and other financial commitments over time.

Final Answer

The primary goal of financial management is c. Maximizing shareholder wealth.

The time value of money affects financial decision-making by b. highlighting the potential for future returns on investment.