Which of the following are common pitfalls or mistakes in estimating continuing value?
I.Naive base-year extrapolation.
II.Naive overconservatism.
III.Purposeful overconservatism.
IV.Liquidation value overconservatism.
A)I and II only.
B)I,II,and III only.
C)II,III,and IV only.
D)III and IV only.

Question

Quizplus · Accepted Answer

Naive base-year extrapolation (I) and naive overconservatism (II) are both common pitfalls in estimating continuing value. Purposeful overconservatism (III) can also be a mistake, as it may result in underestimating the potential value of the company. Liquidation value overconservatism (IV) is not a common mistake in estimating continuing value as it is a different type of valuation approach.

Which of the Following Are Common Pitfalls or Mistakes in Estimating