The correct answer is: A. Net Income Approach
The net income approach is a method of calculating the value of a business that assumes that there is no corporate tax. This means that the value of the business is calculated based on its net income, which is its earnings after taxes. The net income approach is often used by investors who are looking to buy a business, as it provides a more accurate picture of the business’s value.
The net operating income approach is a method of calculating the value of a business that assumes that there is a corporate tax. This means that the value of the business is calculated based on its net operating income, which is its earnings before taxes. The net operating income approach is often used by lenders, as it provides a more conservative picture of the business’s value.
The traditional approach is a method of calculating the value of a business that does not assume any particular tax rate. This means that the value of the business is calculated based on its earnings, regardless of whether or not there is a corporate tax. The traditional approach is often used by appraisers, as it provides a more flexible picture of the business’s value.
In conclusion, the net income approach is the only approach that assumes that there is no corporate tax.