Which of the Following Can Be a Potential Problem When

question 56

Multiple Choice

Which of the following can be a potential problem when using comparables to value a firm?

• A)estimating a good opportunity cost of capital to use
• B)identifying a good value-relevant attribute
• C)finding similar firms
• D)Both B and C are correct.

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Definitions:

Absorption Costs

The total of all direct and indirect manufacturing costs assigned to a product.

Suboptimal Decisions

Decisions that do not yield the best possible outcome or that are less efficient compared to the optimal choice.

Buying Division

A segment within a company responsible for purchasing goods, materials, and services from external suppliers.

Transfer Prices

Prices used for the sale of goods or services between departments or subsidiaries within the same company, often set to comply with tax laws.