Eleanor is valuing a young company using a multiples approach. To do this, she has identified...
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Eleanor is valuing a young company using a multiples approach. To do this, she has identified five comparable firms, but none of them are perfect matches for the company she is valuing. Furthermore, they each individually result in a very different valuation. Using this information, how could she improve her valuation? O She should calculate the multiple for each of the five firms and use the average of this so as to reduce the noise of the estimated value she gets O She should try to identify and only use the best one or two comparables and ignore the others O She should calculate the multiple for each of the five firms and use the median of this so as to reduce the influence of outliers O All of the other choices are reasonable things to do Eleanor is valuing a young company using a multiples approach. To do this, she has identified five comparable firms, but none of them are perfect matches for the company she is valuing. Furthermore, they each individually result in a very different valuation. Using this information, how could she improve her valuation? O She should calculate the multiple for each of the five firms and use the average of this so as to reduce the noise of the estimated value she gets O She should try to identify and only use the best one or two comparables and ignore the others O She should calculate the multiple for each of the five firms and use the median of this so as to reduce the influence of outliers O All of the other choices are reasonable things to do
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Related Book For
Equity Asset Valuation
ISBN: 978-0470571439
2nd Edition
Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen
Posted Date:
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