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Nostrana [21]
4 years ago
5

Do small changes in the assumptions pertaining to the estimation of the terminal value have a significant impact on the calculat

ion of the total value of the target firm? If so, why?
Business
1 answer:
IgorC [24]4 years ago
8 0

Answer:

Yes, small changes in the assumptions pertaining to the estimation of the terminal value have a significant impact on the calculation of the total value of the target firm.

Explanation:

Terminal value is dependent on the input used in the valuation and the two inputs which heavily influence the value of enterprise are future growth projection and discount rate.

Accurately projecting the future cash flow can be a doubting task and can result in a degree of uncertainty built into estimate.

Small changes in the assumptions pertaining to the estimation of the terminal value have a significant impact on the calculation of the total value of the target firm. This is because, it is these small changes in the stable growth rate can change the terminal value significantly and the effect gets larger as the growth rate approaches the rate used in the estimation of the total value of the target firm.

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Argo, a firm organizing adventure travel, has returns that vary with the economy. Argo predicts that there is a 20% probability
nexus9112 [7]

Answer: 8%

Explanation:

The expected return is a weighted average of the returns given the probability of certain states of the economy:

= (Prob. of boom * return if boom) + (Prob. of normal * return if normal) + (Prob. of  weak * return if weak)

= (20% * 35%) + (50% * 14%) + (30% * -20%)

= 0.07 + 0.07 - 0.06

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3 years ago
A department begins the month with 100 units at a cost of $7,500 and 25% complete in work in process. An additional 1,000 units
GarryVolchara [31]

Answer:

$1,282

Explanation:

beginning WIP = 100 units 25% complete, so EUP are 25 units

units started = 1,000

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the company processed 75 EUP form beginning WIP (100 - 25) + 1,000 units started - 100 EUP in ending WIP (200 - 100), so total equivalent units for the month = 975

cost per EUP = $12,500 / 975 = $12.8205

ending WIP balance = 100 EUP x $12.8205  = $1,282.05 ≈ $1,282

8 0
3 years ago
One reason demographic variables are the most popular bases for segmenting customer groups is because they ________. Group of an
Korolek [52]

Demographic factors are the most one of the mose used bases for separating or segmenting consumer group. One reason demographic variables are the most popular bases for segmenting customer groups is because are easier to measure than other variables.

Demographics variables often helps consumer needs, wants, and usage rates often to differ. These factors easier to measure than other type of variables.

The segmentation of variable divides the market into smaller means with the use of demographic factors. these factors used are age, gender, and income.

Conclusively, customer segmentation method used is very easy to get through census data, analytics software, consumer forecast etc.

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brainly.com/question/14163962

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