If Market Value Is Related to Book Value

question 12

Multiple Choice

If market value is related to book value:

• A) Returns should not be related to accounting earnings per share, divided by price at the beginning of the accounting period
• B) Returns should be related to accounting earnings per share, divided by price at the beginning of the accounting period
• C) Returns should be related to accounting earnings per share, multiplied by price at the beginning of the accounting period
• D) Returns should be related to accounting earnings per share, divided by price at the end of the accounting period

---

Definitions:

Income Tax Rate

The Income Tax Rate is the percentage at which an individual or corporation is taxed on their income, varying according to earnings and jurisdictional tax laws.

After-Tax Discount Rate

The rate of return used in capital budgeting that accounts for taxes, providing a more accurate measure of net present value or investment profitability.

Straight-Line Depreciation

A procedure for apportioning the cost of a tangible good over its operational lifespan in uniform annual amounts.

Initial Investments

The initial capital outlay required to start a project, purchase assets, or acquire a company, reflecting the upfront costs to begin operations.