a)
i) Profit maximization refers to good financial performance which focuses more on short term thinking of quick wins or high profits irrespective of the long-term implications or consequences of this short-term profits on a company and its shareholders. It focuses more on a narrow, short-term performance parameters like return on equity, return on investment, return on assets etc. (2 marks)

ii) Shareholder wealth maximization relates to long term approach to sustainably grow the value of shareholder interest which translates to sustainable share price growth and good dividend payments and focuses more on long term value and decisions made based on long term strategic focus rather than short term quick profits. (2 marks)

b)
Inherent Disadvantages of Profit Measure:

• Profits are short term and might be driven by short term management interest.
• Creative accounting can be used to produce and boost profits which might not be sustainable.
• Profits might be book profits with no bearing on the real cash or cash flow of the entity.
• Profit might not consider time value of money.
• Profits might ignore the interest of other non-shareholders like the environment which will create long term problem for the company.

(Any 3 points @ 2 marks each = 6 marks)

Advantages of Wealth Maximisation:

• Time value of money
• It promotes the economic welfare of shareholders
• It helps for achieving other objectives
• It is useful for taking investment decisions
• Payment of regular dividend

c)
i) Number of new shares:

3 old shares = 2 new shares
600,000 old shares = ?

600,000 shares/3 x 2 = 400,000 new shares under rights issue (3 marks)

ii) Amount of money of new shares issued = Number of new shares x right issue price
= 400,000 x GH¢6 = GH¢2,400,000

Existing value of shares = number of issued shares x currently share price
= 600,000 x GH¢8 = GH¢4,800,000

Total value of the company = Existing value + new shares issued value
= GH¢4,800,000 + GH¢2,400,000
= GH¢7,200,000 (5 marks)