Reading 46: Private Company Valuation-LOS b 习题精选 property, valuation, business, 2011, class

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Session 12: Equity Investments: Valuation Models
Reading 46: Private Company Valuation

LOS b: Discuss the uses of private business valuation, and explain applications of greatest concern to financial analysts.

 

 

Assume that a property has a gross annual income equal to $150,000, and that comparable properties have a gross income multiplier equal to 11.25. The gross income multiplier approach provides a market value for this property that is closest to:

A) $1,687,500.

B) $1,625,000.

C) $1,333,333.

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Gross income multiplier technique: MV = gross income × income multiplier.
MV = $150,000 × 11.25 = $1,687,500

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Assume that a property has an estimated net operating income (NOI) equal to $150,000. Further assume that comparable properties have a capitalization rate of 11%. The direct income capitalization approach provides a market value for this property that is closest to:

A) $13,636,363.

B) $1,500,000.

C) $1,363,636.

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Assume that a property that you are evaluating has a gross annual income equal to $230,000, and that comparable properties are selling for 10.5 times gross income. The gross income multiplier approach provides a market value for this property that is closest to:

A) $2,587,500.

B) $2,415,000.

C) $2,190,476.

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Gross income multiplier technique: MV = gross income × income multiplier.
MV = $230,000 × 10.5 = $2,415,000

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Which of the following is least likely an example of a transaction-related valuation for a private company?

A) Bankruptcy proceeding.

B) Performance-based managerial compensation.

C) Financial reporting.

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Venture capital financing, initial public offering (IPO), bankruptcy proceeding, performance-based managerial compensation, and sale in an acquisition are all examples of transaction-related valuations for a private company.

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Which of the following is least likely an example of a compliance-related valuation for a private company?

A) Financial reporting.

B) Bankruptcy proceeding.

C) Tax purposes.

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A bankruptcy proceeding is an example of a transaction-related valuation for a private company.

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Which of the following is least likely an example of a litigation-related valuation for a private company?

A) Bankruptcy proceeding.

B) Lost profits claims.

C) Divorce settlements.

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Litigation-related valuations may be required for shareholder suits, damage claims, lost profits claims, or divorce settlements. A bankruptcy proceeding is an example of a transaction-related valuation for a private company.