Discuss the two variables that must be considered whether you are using the present value of cash flow approach or the relative valuation ratio approach to valuation. Why are these variables relevant for either valuation approach?
Answer to relevant QuestionsList the three variables that are relevant when attempting to determine whether the earnings multiple (P/E ratio) for an industry should be higher, equal to, or lower than the market multiple.A biotechnology firm is growing at a compound rate of more than 21 percent a year. (Its ROE is over 30 percent, and it retains about 70 percent of its earnings.) The stock of this company is priced at about 65 times next ...Discuss why you would want to use EVA return on capital rather than absolute EVA to compare two companies or to evaluate a firm's performance over time.Using book value to measure profitability and to value a company's stock has limitations.Discuss five such limitations from an accounting perspective. Be specific.Your client is considering the purchase of $100,000 in common stock, which pays no dividends and will appreciate in market value by 10 percent per year. At the same time, the client is considering an opportunity to invest ...
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