Respuesta :
Answer:
Stockholder wealth growth should continuously be supposed of long term goal. It is in notice of shareholder or depositor that his prosperity continues to grow with smallest risk. Action which keeps stock at 20$ for numerous year and then increased to 40$ in year 5 is desirable as the wealth of the stockholder increases.
Sometime company capitalize in building dimensions so that it can yield more units of its product thus growing the sale. When the corporation is doing capex, stock price will remain stationary and as soon as its capex ends stock price will rise at fast pace.
The second course of action that keeps the stock at $20 for many years and then rises to $40 in the 5th year is better as the wealth of the stockholder maximizes at a steady rate.
What do you mean by wealth maximization?
Wealth Maximization is the concept of increasing the value of a business in order to increase the number of shares held by shareholders.
The growth of shareholders' wealth should continue to be a long-term goal. It is up to the shareholder or investor to determine if his or her fortune will continue to grow at a very small risk.
Sometimes a company makes money by building size so that it can produce more units of its product and thus increase sales. When a company makes a capital expenditure the stock price will remain stagnant and as soon as the capital expenditure ends the stock price will rise sharply.
Thus, the second course of action is better as it slowly and steadily increases the value of stock price from $20 to $40 in 5 years.
To learn more about wealth maximization, refer to the link:
https://brainly.com/question/25534066
