Research and discuss the topics of profit maximization and maximization of shareholder equity.
1. Compare and Contrast the goals of profit maximization and maximization of shareholder equity.
2. What do these terms mean to the financial aspect of a firm?
3. Are these two terms in conflict or congruence with each other? Why or why not? Give examples.
4. What is the ultimate goal of a firm? Explain with examples.
5. If you remember the agency problem from your MBA508 course: managers won't work for the owners unless it's in their best interest. The agency problem is a result of the separation between the decision makers and the owners of the firm. As a result managers may make decisions that are not in line with the goal of maximization of shareholder wealth. What might be some difficulties involved with the ultimate goal of a firm you identified above and the agency problem?