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Describe the benefits of Wealth maximisation criterion

Value of an asset must be viewed in terms of the benefits it can produce. Worth of a course of action can similarly be judged in terms of value of the benefits it produces less the cost of undertaking it. An important element in computing the value of a financial course of action, is the precise estimation of benefits associated with it. Wealth maximisation criterion is based on the measurement of benefits in the case of profit maximisation criterion. Cash flow is a precise concept with a definite connotation. Measuring benefits in terms of case flow avoids ambiguity associated with accounting profits. This is first operational feature of the net present worth maximisation criterion.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M9581099

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