Question #18
Reading: Reading 24 Private Company Valuation
PDF File: Reading 24 Private Company Valuation.pdf
Page: 10
Status: Correct
Correct Answer: B
Question
Which of the following approaches to private company valuation uses discounted cash flow analysis?
Answer Choices:
A. The market approach
B. The income approach
C. The asset-based approach
Explanation
The income approach values a firm as the present value of its future income. The asset-
based approach values a firm as its assets minus liabilities. The market approach values a
firm using the price-multiples from the sales of comparable assets.