14. Price Ratios (LO4, CFA5) Two similar companies acquire substantial new production facilities, which they both will
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14. Price Ratios (LO4, CFA5) Two similar companies acquire substantial new production facilities, which they both will depreciate over a 10-year period. However, Company A uses accelerated depreciation while Company B uses straight-line depreciation. In the first year that the assets are depreciated, which of the following is most likely to occur?
a. A’s P/CF ratio will be higher than B’s.
b. A’s P/CF ratio will be lower than B’s.
c. A’s PE ratio will be higher than B’s.
d. A’s PE ratio will be lower than B’s.
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Related Book For
Fundamentals Of Investments Valuation And Management
ISBN: 9781260013979
9th Edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
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