One of the Drawbacks of Harvesting by Withdrawing Cash Flows

question 25

True/False

One of the drawbacks of harvesting by withdrawing cash flows slowly is that the owner must seek out a buyer for the eventual sale of the business.

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Definitions:

Supernormal Rate

Typically refers to an above-average rate of return on investment or growth.

Normal Rate

A standard or typical rate often used in finance or economics, which can refer to interest rates, growth rates, or other measures.

Implied Constant Growth

A growth rate inferred from the dividend discount model, assuming dividends grow at a constant rate indefinitely.

Market Return

The total return on an investment over a specified period, including dividends, interest, and capital gains, as measured by the change in the market price.