Based on the Premise of the Capitalization of Earnings Method

question 8

Multiple Choice

Based on the premise of the capitalization of earnings 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:

Longitudinal Study

A research design that follows the same subjects over a period of time, allowing for the observation of changes or developments.

Moral Reasoning

The process by which individuals make decisions about what is right and wrong, based on personal, societal, or ethical standards.

Test Standardization

The process of making a test consistent in terms of administration and scoring to ensure results are comparable across different populations.

SAT

A standardized test commonly used for college admissions in the United States, assessing proficiency in critical reading, math, and writing.