An appraiser is working for a large multinational that is considering buying a privately held firm in the southeastern United States. The multinational believes that the acquisition would allow it to realize cost savings in its production process. Which of the following is the most likely standard of value the appraiser will use? A. Fair value. B. Market value. C. Investment value.
inv. val.
why?
because of potential value of synergies
that’s team work
What’s wrong with fair vaue? Or market value? Synergy will occur regardless, no?
Investment value is correct. Synergy will occur, yes. So why would you not want to include it in your valuation?
No lo entiendo!
Investment value: Focuses on the value to a particular buyer and is important in private company valuation Fair marktt value: Most often used for tax purposes in the United States, fair market value is a cash price characterized by: A hypothetical willing and able seller sells the asset to a willing and able buyer. An arm’s length transaction (neither party is compelled to act) in a free matket. A well-informed buyer and seller. Mark where the purchase will be levered
are those cfa definitions or from other sources
schweser but i cross checked with the book. and they are same.
Good to knnow these special definitions.