Which of the Following Is a Reason Why Purpose of Business

question 34

Multiple Choice

Which of the following is a reason why purpose of business valuation is important?

• A) It helps develop a suitable capitalization rate.
• B) It can assist in representing the expected future benefits.
• C) It determines the premise of value.
• D) It identifies assumptions and limiting conditions.

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Definitions:

Lowest Average Profit

The minimum average profit realized over a specified period.

Purchase Quantity

The number of units of a product that consumers buy over a specified period.

Tornado Chart

A graphical method used to display the sensitivity of a result to changes in its input variables, usually in the form of a horizontal bar chart.

NPV

Net Present Value, a calculation used to assess the profitability of an investment, representing the difference between the present value of cash inflows and outflows over a period of time.