How Does a Firm Determine Its Enterprise Value

question 31

Multiple Choice

How does a firm determine its enterprise value?

• A) price per share of its stock X the common shares outstanding.
• B) sales X (1 + growth rate in sales)
• C) EBIT X (1 - tax rate)
• D) net income + depreciation

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Definitions:

Programmable Watch

A wristwatch with smart capabilities that can be programmed for various functions beyond timekeeping, such as fitness tracking or notifications.

Variable Cost

Expenses that change in proportion to the activity of a business.

Perceived Value

The customer's evaluation of the worth of a product or service based on its ability to meet their needs and expectations, rather than its objective cost or value.

Cost Competitive Parity

A pricing strategy where a company sets its product prices based on competitors' prices to stay competitive.