In the Earnings Methods of Business Valuation, the Rate of Return

question 86

Multiple Choice

In the earnings methods of business valuation, the rate of return associated with a "normal risk" business is:

• A) 15 percent.
• B) 25 percent.
• C) 35 percent.
• D) 50 percent.

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Definitions:

Medium

A means or instrumentality for storing or communicating information.

Specific Invoice Method

An inventory valuation method that tracks each item in inventory by its specific cost and invoice.

Ending Inventory

The total value of goods available for sale at the end of the accounting period, calculated by adding purchases to the beginning inventory and subtracting the cost of goods sold.

Cost of Goods Sold

Expenses directly related to the production of the goods sold by a business, including material costs and direct labor, crucial for calculating gross profit.