A business is valued by estimating the present value of the company's estimated earnings over a specified time. This method of valuing a business is known as
A) balance sheet method.
B) discounted future earnings method.
C) income statement method.
D) succession method.
E) ESOT method.

Question

Quizplus · Accepted Answer

The method described is the discounted future earnings method, which involves estimating a company's future earnings and then determining their present value through a process of discounting. This is a commonly used method for valuing businesses, and takes into account both the income and the inherent risks associated with the company's operations.

A Business Is Valued by Estimating the Present Value of the Company's