Which one correctly shows the sequence of earnings capitalization process? forec

Question

Which one correctly shows the sequence of earnings capitalization process?

forecast of I/S -> forecast of annual earnings for business life --> determination of the cost of equity ---> Calculation of present value of future earnings.

determination of cost of equity -> forecast of annual earnings for business life --> forecast of I/S ---> Calculation of present value of future earnings.

Calculation of present value of future earnings--> determination of cost of equity -> forecast of annual earnings for business life --> forecast of I/S

determination of cost of equity -> forecast of annual earnings for business life -->Calculation of present value of future earnings --> forecast of I/S.

Explanation / Answer

it is option D

Since the earnings capitalization process in which the value of the company will be found by forecasting the future earnings and discounting using company’s cost of equity

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