The abnormal net income model defines the market value of a firm
A) is its book value minus the present value of expected economic profits.
B) is its book value plus the present value of expected economic profits.
C) is its book value divided by the present value of expected economic profits.
D) is its book value multiplied by the present value of expected economic profits.
Correct Answer:
Verified
Q6: Stock prices change when.
A)expectations are based on
Q7: Economic profit equals
A)NOPAT less capital charges.
B)NOPAT plus
Q8: The cost of debt can be found
Q9: Economic profit is
A)revenue - variable costs +
Q10: The equity premium is the return
A)investors expect
Q12: If the return on capital is less
Q13: Economic profit equals
A)accounting profit plus the cost
Q14: Exit from a market will stop when
A)accounting
Q15: If the return on capital is equal
Q16: With free entry
A)economic profits are possible over
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