Question #5

Reading: Reading 24 Private Company Valuation

PDF File: Reading 24 Private Company Valuation.pdf

Page: 4

Status: Incorrect

Correct Answer: A

Your Answer: C

Part of Context Group: Q5-6 First in Group
Shared Context
- The "Choo Comparison Method" of valuing a private company is consistent with which major approach? A) Income Approach. B) Multiple Approach. C) Market Approach.
Question
Is Constable right in his suggested renaming of the final valuation?
Answer Choices:
A. Yes
B. No, a valuation based on analysis of company fundamentals should be referred to as an Intrinsic Value
C. No, it should be renamed Market Value as it uses primarily market information
Explanation
Investment value focuses on the value to a particular buyer and is important in private company valuation.
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