The following statements are factual discussions about Capitalization of Earnings Method except: Select the correct response: You may use past earnings in the Capitalization of Earnings method for cases wherein earnings are fixed. In capitalization of earnings method, the value of the asset or the O investment is determined using the anticipated earnings of the company divided by the cost of capital. Cost of Capital used in the Capitalization of Earnings method is equivalent to the expected yield or the required rate of return. The formula used in Capitalization of Earnings is actually grossing up O the future earnings using capitalization rate to come up with the estimated asset value.
The following statements are factual discussions about Capitalization of Earnings Method except: Select the correct response: You may use past earnings in the Capitalization of Earnings method for cases wherein earnings are fixed. In capitalization of earnings method, the value of the asset or the O investment is determined using the anticipated earnings of the company divided by the cost of capital. Cost of Capital used in the Capitalization of Earnings method is equivalent to the expected yield or the required rate of return. The formula used in Capitalization of Earnings is actually grossing up O the future earnings using capitalization rate to come up with the estimated asset value.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 37P
Related questions
Question
![The following statements are factual discussions about Capitalization of Earnings
Method except:
Select the correct response:
You may use past earnings in the Capitalization of Earnings method for
cases wherein earnings are fixed.
In capitalization of earnings method, the value of the asset or the
investment is determined using the anticipated earnings of the company
divided by the cost of capital.
Cost of Capital used in the Capitalization of Earnings method is
equivalent to the expected yield or the required rate of return.
The formula used in Capitalization of Earnings is actually grossing up
the future earnings using capitalization rate to come up with the
estimated asset value.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffe8cd8d5-d8c3-442e-8ae6-b51f7ae9a03a%2F3dcb3ba7-e9ec-4e2d-8fa1-8d2acd86ce6b%2Fxlqc47n_processed.png&w=3840&q=75)
Transcribed Image Text:The following statements are factual discussions about Capitalization of Earnings
Method except:
Select the correct response:
You may use past earnings in the Capitalization of Earnings method for
cases wherein earnings are fixed.
In capitalization of earnings method, the value of the asset or the
investment is determined using the anticipated earnings of the company
divided by the cost of capital.
Cost of Capital used in the Capitalization of Earnings method is
equivalent to the expected yield or the required rate of return.
The formula used in Capitalization of Earnings is actually grossing up
the future earnings using capitalization rate to come up with the
estimated asset value.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Practical Management Science](https://www.bartleby.com/isbn_cover_images/9781337406659/9781337406659_smallCoverImage.gif)
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
![Practical Management Science](https://www.bartleby.com/isbn_cover_images/9781337406659/9781337406659_smallCoverImage.gif)
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,