How Does a Firm Determine Its Enterprise Value

question 29

Multiple Choice

How does a firm determine its enterprise value?

• A)price per share of its stock × the common shares outstanding.
• B)sales × (1 + growth rate in sales)
• C)EBIT × (1 - tax rate)
• D)Net Income + depreciation

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Definitions:

Outside Supplier

A third-party company or organization that provides goods or services to another company, often part of the supply chain.

Variable Costs

Charges that directly align with the scale of production or the amount of output generated.

Transfer Price

The price charged for goods or services transferred between departments or divisions of the same company or between related entities.

Selling Division

A part of an organization responsible for selling the company's products or services.