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:

Passive Observers

Individuals who watch events unfold without becoming involved or influencing the outcome.

Active Agents

Individuals or entities that actively engage in processes or activities, making decisions and taking actions that influence outcomes.

Competing Commitments

Conflicting obligations or priorities that pull an individual or organization in different directions, making it difficult to achieve goals.

Organization Development (OD)

A field of research, theory, and practice dedicated to expanding the knowledge and effectiveness of people to accomplish more successful organizational change and performance.