In Theory,all Three Valuation Models,when Correctly Implemented with Internally Consistent

question 51

Multiple Choice

In theory,all three valuation models,when correctly implemented with internally consistent assumptions,will produce the same estimates of value.However,in practice,which of the following errors can result in different value estimates?

• A) Incomplete or inconsistent earnings and cash flow forecasts
• B) Inconsistent estimates of weighted average costs of capital
• C) Incorrect continuing value computations
• D) All of these errors result in different value estimates.

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Definitions:

Opiates

A group of narcotics derived from the opium poppy that provide a euphoric rush and depress the nervous system.

Opium Poppy

A flowering plant from which opium and many opiates, including morphine and codeine, are derived.

Narcotics

Drugs used to relieve pain and induce sleep; the term is usually reserved for opiates.

Euphoric Rush

A sudden, intense feeling of happiness, excitement, or well-being often experienced spontaneously or as a result of certain stimuli or activities.