Question

an optional combination of decision relating to investment, financing and dividends will maximize the value of firm to its shareholders. examine​

Answer 1

Answer:

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Explanation:

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Answer 2

An optional combination of decision relating to investment, financing and dividends does maximize the value of a firm to its shareholders.

• These key decisions are interrelated since the underlying purpose of these three decisions is the same, which is the shareholder capital maximization.
• As there are all interrelated, the joint effect of these decisions on the market price of the business share has to be addressed, and such decisions must be resolved together.
• Investing in a new project includes properly funding for the specific plan. Successively, the financing decision is affected by & affects the decision to the dividend because retained earnings using internal funding deprive shareholders of their dividends.
• Effective financial management allows for efficient joint decision making, which is possible by carefully analyzing each decision about its potential impact on the considerable wealth of the principal shareholder.