Schweser practice exam V2 exam 2 pm Q101. The exit value is 300 in 5 yrs Discount rate is 40% failure prob is 15% the answer directly use 300/1.4^5 Why not apply the failure prob?
i was thinking the same thing - although the answer that i calculated with the failure didnt come up in the choices so i recalcd without…personally think it should be there
Errata google it. Was in an analyst forum post
I only use CFAI text/mocks but I would double check the question. There are multiple methods to value Venture Capital deals in CFAI text. The approach you are referring to is based on different scenarios with probability weights. The test prep you are using may be looking for Venture Capital Method. No weights needed.
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i emailed schweser and got an answer from BJ himself. he said that since the probability of failure was built into the discount rate given (in the question, it says something like: because of the level of risk, a discount rate of 40% was used). seems like a stupid trick question, if so.