Based on the Premise of the Capitalization of Earning Method

question 6

Multiple Choice

Based on the premise of the capitalization of earning method, if a business for sale is low risk with good growth potential, the value will be based on which of the following?

• A) A high capitalization rate and a low earnings multiplier
• B)A low capitalization rate and a high earnings multiplier
• C) A high capitalization rate and a high earnings multiplier
• D) A low capitalization rate and a low earnings multiplier

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Definitions:

Anemones

Marine or freshwater polyps that belong to the phylum Cnidaria, characterized by their colorful appearance and a ring of tentacles surrounding a central mouth.

Euphotic Zone

The layer of a body of water that is sufficiently lit by sunlight, allowing photosynthesis by aquatic plants and phytoplankton.

Light Absorption

The process by which materials take in light energy, which can be converted into other forms of energy or result in an increase in temperature.

Coral Bleaching

The phenomenon where corals lose their vibrant colors and turn white due to stress factors like increased sea temperatures and pollution.