One Way to Value a Business Is to ________

question 16

Multiple Choice

One way to value a business is to ________. In general, the business should sell for 3 to 5 times its annual net earnings.

• A) look at a multiple of its net earnings
• B) look at a comparison with similar businesses
• C) use an appropriate benchmark
• D) look at a professional appraisal

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Definitions:

Acquittal

A legal judgment that a person is not guilty of the crime with which they have been charged.

Representativeness Heuristic

A cognitive shortcut that involves making judgments about the probability of an event under uncertainty, based on how much it resembles available prototypes.

Death Penalty

A legal punishment where an individual is put to death by the state as a penalty for a crime.

Representativeness Heuristic

A mental shortcut used when making judgments about the probability of an event under uncertainty, based on how similar it is to our stereotypes of similar occurrences.