Which of the following valuation methods is appropriate for investments in a company with negative cash flows at the time of the investment,but has the potential to generate significant earnings?

Question

Quizplus · Accepted Answer

The venture capital method is appropriate for investments in a company with negative cash flows at the time of the investment but has the potential to generate significant earnings. This method takes into account the future potential cash flows of the company and the expected exit strategy for the investor. It is commonly used by venture capitalists when investing in startups or early-stage companies that have high growth potential but may not have positive cash flows yet. The other options listed are not specifically designed for this scenario.

Which of the Following Valuation Methods Is Appropriate for Investments