You Are Considering the Purchase of a Business That Is

question 82

Multiple Choice

You are considering the purchase of a business that is currently earning $25,000 per year in after-tax profit. If these conditions are expected to continue year after year into the future, and the interest rate is currently 10 percent, the current market value of this business is

• A) $2,500.
• B) $25,000.
• C) $250,000.
• D) $2,500,000.

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Definitions:

Distinctiveness

The quality of being distinguishable or markedly different from others, often leading to a sense of individuality.

Consistency

The degree to which a person or process reliably produces the same results over time.

Consensus

A general agreement or collective opinion among a group of individuals.

Frequency

The rate at which a periodic phenomenon occurs, such as the number of waves passing a point in one second.