Assessing the Goal of Sports Products, Inc. Loren Seguara and Dale Johnson both work for Sports Products, Inc., a major producer of boating equipment and accesso Loren works as a clerical assistant in the Accounting Department, and Dale works as a packager in the Sh about the company. Dale complained that he had always worked hard try and those of his co-workers in the department, the firm's stock price had declined nerly $2.00 nes ipping Department. Onna ther lunch break one day they begin takng ing not to waste packing materials and efficiently and cost-effectively performing his job. In spite of his effo a per share over the past 9 months. Loren indicated that she shared Daie's frustration icularly because the firm's profits had been rising. Neither could understand why the firm's stock price was falling as profits rose, had seen documents describing the firm's profit-sharing plan under which all managers were pertialy compensated on the basis of the firm's suggested that maybe it was profit that was important to management, because it directly afflected their pay. Dale said. "That doesnt make sense, because the stockholders own th firm. Shouldn't management do what's best for stockholders? Something's wrong" Loren responded. "Well, maybe thet explains why the company hasn't concerned itself with the stock price. Look, the only profits that stockholders receive are in the form of cash dividends, and this firm has never paid diwidends during its 20-year history We as stockholders therefore don't directly benefit from profits. The only way we benefit is for the stock price to rise Dale chimed in. "That probably explains why the fim is being sued by state and federal environmental officials for dumping poilutants in the adjacent stream. Why spend money for pollution control? it increases costs, lowers profits, and therefore lowers manngement's eamings a. What should the management of Sports Products, Inc, pursue as its overriding goal? Why? (Select all the chaicds thal apply A. Maximization of shareholder wealth, which means maximization of share price, should be the primary goal of the firm B Unlike profit maximization, maximization of shareholder wea n considers tr ng cash nows, and rsk t also ren cts the worth of re o ne ' mes ent n he t m a ry time. It is the value they can realize should they decide to sell their shares Maximization of the firm's profits, which means maximization of share price, should be the primary goal of the firm c