If an analyst expects a firm to generate net income each period exactly equal to required...
If an analyst expects a firm to generate net income each period exactly equal to required earnings, then the value of the firm will be
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A. exactly equal to the book value of common shareholders' equity.
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B. greater than the book value of common shareholders' equity.
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C. less than the book value of common shareholders' equity.
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D. exactly equal to working capital.
Homework Answers
As the net income is exactly equal to the required earnings, the value of the firm will be equal to the book value of common shareholders equity as NI = Book value of equity * Required return
Answer is A. exactly equal to the book value of common shareholders' equity
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If an analyst expects a firm to generate net income each period
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