1. The following is a quote from a New York Times article: “If a company makes product do- nations to the school—computers for instance—then the image of a company goes up as graduate students use the company’s products.” Does such action square with a company’s objective of profit maximization? Discuss.
2.Is the maximization of profit margin (profit as a percentage of total sales) a valid financial objective of a corporation? Discuss.
3. “The growth of consumer information organizations, legal requirements, and warranty requirements has caused significant increases in the cost of customer satisfaction. Thus it is no longer useful to talk about profit maximization as a company objective.” Comment on this quote.
4.Discuss the difference between profit maximization and shareholder wealth maximization. Which of these is a more comprehensive statement of a company’s economic objectives?
5.Explain the term satisfice as it relates to the operations of a large corporation.
6.Discuss the meaning of the term principal-agent problem. Why does this problem exist?
7. Why may corporate managers not specifically aim at profit (or wealth) maximization for their companies?
8.What are some of the forces that cause managers to act in the interest of shareholders?
9. Do you believe that profit (or shareholder wealth) maximization still represents the best overall economic objective for today’s corporation?
10. Because of inflation, a company must replace one of its (fully depreciated) machines at twice the nominal price paid for a similar machine 8 years ago. Based on present account- ing rules, will the company have covered the entire cost of the new machine through depre- ciation charges? Explain by contrasting accounting and economic costs.
Please Answer Questions These questions should be answered in a conversational manner indicating that you have knowledge of the topic and are able to sustain a dialogue.
