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What would be the capitalized value of a business if the expected profit is K200 000 and the return is 10%? Fill the table below with the appropriate words. Read and understand the definitions or question carefully before deciding to write the appropriate word.

Business/Management

ScanSolve AI Answer

Answer

11

X2 000 000\text{X2 000 000}

Step-by-step solution

3 steps

Part 11· 3 steps

To find the capitalized value of a business, you divide the expected profit by the rate of return.

  1. Identify the given values.

    Expected Profit = X200 000
    Rate of Return = 10% = 0.10

  2. Apply the formula for capitalized value.

    Capitalized Value=Expected ProfitRate of Return\text{Capitalized Value} = \frac{\text{Expected Profit}}{\text{Rate of Return}}

  3. Substitute the values and calculate.

    Capitalized Value=X200 0000.10\text{Capitalized Value} = \frac{\text{X200 000}}{0.10} Capitalized Value=X2 000 000\text{Capitalized Value} = \text{X2 000 000}

    The capitalized value of the business is X2 000 000\boxed{\text{X2 000 000}}.

Part 12

Fill in the table with the appropriate words.

  • i. A purchase agreement that does not place restrictions on the buyer.
    • Outright Purchase
  • ii. The value of the business after the discounted cash flow method of valuation.
    • Intrinsic Value
  • iii. A term that also means the same as 'rate of return'.
    • Yield
  • iv. What name is given to stock investors who 'buy and hold'?
    • Long-term Investors
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