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A firm will maximize the present value of future profits by maximizing current profits when: the growth rate in profits is constant. the growth rate in profits is larger than the interest rate. Correct!
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16 votes
16 votes
A firm will maximize the present value of future profits by maximizing current profits when: the growth rate in profits is constant. the growth rate in profits is larger than the interest rate. Correct! the interest rate is larger than the growth rate in profits and both are constant. the growth rate and interest rate are constant and equal.

User Hazim
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1 Answer

19 votes
19 votes

Answer:

the interest rate is larger than the growth rate in profits and both are constant.

Step-by-step explanation:

In the case when the firm wants to maximize the present value of the profits that arise in near future so here the current profits would be maximize at the time when the rate of interest would be more than the growth rate and both would remain constant

Hence, the option c is correct

User Zvezdochka
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