swap and all, here is mine.
Analysts Jordan Green and Noelle Lafonte are discussing terminal value estimation in venture capital and buyout investments. Lafonte states: “Private equity firms often use scenario analysis in both venture capital and buyout investments to estimate terminal value.” Green adds: “Private equity firms only use the multiple of net income approach in leveraged buyout (LBO), but not in venture capital investments to estimate terminal value.” With respect to their statements: A) Lafonte is correct but Green is incorrect. B) Green is correct but Lafonte is incorrect. C) Neither Lafonte nor Green is incorrect. Your answer: B was incorrect. The correct answer was A) Lafonte is correct but Green is incorrect. Lafonte’s statement is correct. Private equity firms can use scenario analysis to estimate terminal value in both venture capital and LBO investments. Under scenario analysis, terminal values are calculated under multiple scenarios using different assumptions. Green’s statement is incorrect. Private equity firms often use a relative value approach to estimate terminal value in both venture capital and LBO investments. Under the multiple of net income approach, terminal year net income is multiplied by the P/E ratio to project terminal equity value.
The choices are swapped. Lafonte’s statement is correct, Green’s is wrong, according to QBank.
Q-bank mixes the letters up every time a test is generated. The letters don’t match the original question.
the explanation is so effed up. does CFAI show a multiples approach in the VC method?
agreed. It seems any method unrelated to CF works for both, so confused.