Question : 11.2   Multiple-Choice Questions 1) Which of the following situation commonly drives : 1222548

 

11.2   Multiple-Choice Questions

1) Which of the following is situation commonly drives a business valuation engagement?

A) hypothecation of assets

B) shareholder dispute

C) hedging a company’s derivatives

D) determination of dividend payout

2) Which of the following is a primary issue of the business valuation theory?

A) determining current benefits from the business

B) estimating expected future benefits

C) calculating historical benefits received

D) calculating financial ratios

3) Which of the following is a difference between a forecast and a projection?

A) A forecast reflects conditions that may occur, whereas a projection reflects expected conditions based on current knowledge of trends in relevant factors.

B) A forecast is typically for a short period, whereas projections can be made several years into the future projection.

C) A forecast is based on hypothetical assumptions, whereas a projection is based on current knowledge of trends.

D) A forecast invites rebuttal arguments of speculation and bias, whereas a projection is deemed to be the most appropriate indicator of expected future benefits.

4) The management of Quills and Ink want to calculate the required rate of return (ROR) of the company. The following information is available:

A) 16.96%

B) 21.20%

C) 18.20%

D) 19.40%

5) Which of the following premiums is generally calculated as the excess of stock market returns over government bond returns?

A) equity risk premium

B) specific company risk premium

C) industry risk premium

D) firm size premium

6) Which of the following gives the calculation of the capitalization rate?

A) the equity risk premium plus the specific company risk premium

B) the required rate of return minus the risk free rate

C) the dividend payout rate plus the long-term sustainable growth rate

D) the discount rate minus the expected long-term sustainable growth rate

7) Which of the following is true of capitalization?

A) It is the same as discounting.

B) It is more commonly used with prospective data.

C) It is applied to a single benefit stream.

D) It converts present values to future benefits.

8) Lilac, Inc. uses a discount rate of 17.5% its expected long-term sustainable growth rate is 1.5%. The net cash flows from operations of the company for the previous years are provided below.

 

Year

Net Cash Flow

2009

$190,835

2010

215,648

2011

185,965

2012

248,752

2013

221,960

Calculate the value of business of Lilac, Inc.

A) $1,063,160

B) $1,215,040

C) $1,328,950

D) $1,090,420

9) Egan, a forensic accountant, was appointed for a business valuation engagement by the management of Dreamsong, Inc. He qualified the purpose of the valuation, type of engagement, and the ownership interest to be considered. What should be Egan’s next step?

A) Issue the valuation report.

B) Estimate the value of the business.

C) Gather the necessary information.

D) Analyze the information gathered.

1. Define the engagement.

2. Gather the necessary information.

3. Analyze the information gathered.

4. Estimate the value of the business.

5. Issue the valuation report.

10) Which of the following is included in the first step of the valuation process?

A) issuing the valuation report

B) analyzing the company’s financial statements

C) selecting and applying a valuation approach

D) qualifying the ownership interest to be considered

 

 

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more