Neither the P/E Approach nor the Dividends- And- Earnings Approach

question 45

True/False

Neither the P/E approach nor the dividends- and- earnings approach rely on dividends as the key input into the valuation of a share.

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Definitions:

Residual Value

The estimated amount that an asset will be worth at the end of its useful life.

Double-Declining-Balance Method

A method of accelerated depreciation which doubles the straight-line depreciation rate and applies it to the asset's remaining book value each year.

Depreciation

The method of distributing the expense of a physical asset over its lifespan to represent its depreciation over time.

Residual Value

The estimated salvage value of an asset at the end of its useful life, representing what it could be sold for or would be worth at that future time.