The ________ approach to valuing a business assumes that a dollar earned in the future is worth less than that same dollar is today.
A) balance sheet
B) capitalized earnings
C) adjusted balance sheet
D) discounted future earnings

Question

Quizplus · Accepted Answer

The discounted future earnings approach is based on the time value of money, which assumes that a dollar earned in the future is worth less than a dollar earned today due to inflation and the potential for investment opportunities. This approach discounts projected future earnings back to their present value to determine the current value of the business.

The ________ Approach to Valuing a Business Assumes That a Dollar