Using the Discounted Future Earnings Approach,the Buyer Estimates

question 123

Multiple Choice

Using the discounted future earnings approach,the buyer estimates:

• A)the company's net income for the next six months.
• B)the company's net income for the several years.
• C)the company's net income for several years and then discounted back to the present value.
• D)the company's net asset for several years and then discounted back to the present value.

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Definitions:

Availability Heuristic

A cognitive bias that causes people to overestimate the likelihood of events based on their ability to recall examples more easily.

Confirmation Bias

The habit of looking for, comprehending, selecting, and reminiscing about information that validates an individual's prior convictions or theories.

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it, also known as the "knew-it-all-along" effect.

Timing Bias

A form of cognitive bias where an individual's decisions or perceptions are influenced by the timing of information or events.