Define the moral philosophy of utilitarianism and explain its relationship to capitalism.

What will be an ideal response?


Utilitarianism is a personal moral philosophy that focuses on the greatest good for the greatest number by assessing the costs and benefits of the consequences of ethical behavior. If the benefits exceed the costs, then the behavior is ethical. If not, then the behavior is unethical. This philosophy underlies the economic tenets of capitalism and is embraced by many business executives and students.

Business

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A company's capital structure consists of common stock only, which amounts to $14 million. However, this year, the company plans to issue $7 million of debt, and use the proceeds to repurchase $7 million of its existing equity. The stock repurchase should not change the size of the company. As a result, any change in the firm's earnings per share (EPS) must be a result of the change in its:

A. level of operations. B. beta coefficient. C. EPS coefficient of variation. D. capital structure. E. EPS standard deviation.

Business