Answered: Whether the firm uses the market-based…

Whether the firm uses the market-based approach or the cost-based approach for pricing decisions, the market forces must be considered. True False

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter14: Valuation: Market-based Approach

Section: Chapter Questions

Problem 13QE

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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

Whether the firm uses the market-based approach or the cost-based approach for pricing decisions, the market forces must be considered.

True

False

Expert Solution

Step 1

Introduction:

Market based approach:

For calculating the selling price of Asset firm uses market based approach.

Based on similar type of Asset value the selling price of asset is determined.

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