If You Want to Buy a Business That Is Growing

question 26

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) book value method
• B) market-based approach
• C) future earnings method
• D) pay-back method

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Definitions:

Foreign-Currency Exchange

The process of exchanging one currency for another, determining how much of one currency is worth in terms of another.

Net Capital Outflow

The difference between domestic savings and domestic investment, representing the amount of capital leaving a country to invest abroad minus the capital inflowing from abroad for investment domestically.

Interest Rate

The percentage of a loan charged to the borrower as interest, usually represented as an annual percentage rate of the remaining loan balance.

Market For Foreign-Currency Exchange

A marketplace where participants can trade currencies from different countries, essentially a repeated framework for the process in