Question
If a business valuation expert determines that the closely-held business being valued possesses a significant risk because of its small size in comparison with many
If a business valuation expert determines that the closely-held business being valued possesses a significant risk because of its small size in comparison with many of its chief competitors, the valuation expert will most likely:
A. ignore the business size issue because clearly the business has been competing with larger firms all along.
B. understand that the size issue is a potentially major risk and adjust for this risk in both the discount rate used in the valuation and by assigning a discount to the base valuation.
C. understand that the size issue is a potential major risk and adjust for this risk either by adjusting the discount rate used in the valuation or by assigning a discount to the base valuation. One or the other should be done, but the valuation expert should not double count the risk by doing both.
D. None of the answers above are correct.
stuck between B and C pls help
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