An Advantage of Using Comparables to Value a Firm Is

question 63

Multiple Choice

An advantage of using comparables to value a firm is that

• A)the inputs are more objective and more readily verifiable than those used in an NPV analysis.
• B)there are always a large number of good value-relevant attributes that can be used.
• C)if a firm is publicly traded, there are always a large number of similar firms that can be used for comparables
• D)All of the above are advantages of using comparables to value a firm.

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Definitions:

Total Revenue

The total receipts a firm receives from sales of its product or services.

Total Revenue

The overall amount of money generated by a firm from selling its goods or services, calculated as the unit price multiplied by the quantity sold.

Perfectly Inelastic Demand

The case in which the quantity demanded does not respond at all to changes in the price; the demand curve is a vertical line.

Demand Curves

A graph representing the relationship between the price of a good and the quantity of that good buyers are willing to purchase at various prices.