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Reading 45: Residual Income Valuation- LOS c(part3)~ Q1-2

 

LOS c, (Part 3): Contrast the recognition of value in the residual income model to value recognition in other present value models.

Q1. In the residual income approach, value tends to be recognized:

A)   earlier than in other present value-based approaches.

B)   later than in other present value-based approaches.

C)   almost exclusively due to estimated terminal value.

 

Q2. In the residual income approach:

A)   value is recognized earlier than in other present value-based approaches.

B)   uncertainty concerning the estimated terminal value is low.

C)   value is predominately derived from expected terminal value.

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