Which of the Following Explains the Rationale for Using "Normalized

question 19

Multiple Choice

Which of the following explains the rationale for using "normalized" earnings under the excess-earnings valuation approach?

• A) Historic asset values are the best reflection of the assets' value in use.
• B) The company's future earnings should always be higher than the past earnings.
• C) The past often provides useful information about the future; past earnings are a good starting point.
• D) Normalized earnings are not used under the excess-earnings valuation approach.

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