If You Want to Buy a Business That Is Growing

question 21

Multiple Choice

If you want to buy a business that is growing rapidly, what is the best valuation method to use to determine a fair price for it?

• A) Future earnings method
• B) Book value method
• C) Market-based approach
• D) Comparison approach
• E) Intuitive method

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Definitions:

Monthly Payment

Monthly payment is the amount paid every month over the term of a loan, lease, mortgage, or other financial agreement.

Personal Financial Planning

The process of managing one's finances by setting goals, assessing resources and liabilities, and devising strategies for achieving financial objectives.

Periodic Payment

A payment made at regular intervals, such as monthly or annually, often in relation to a loan or mortgage.

Ordinary Annuity

A series of equal payments made at regular intervals, with the first payment occurring at the end of the first period.