CFA CFA Level 1 Question of the Week – Equity

Question of the Week – Equity

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    • Avatar of AdaptPrepAdaptPrep
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        • Undecided
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        The balance sheet value of assets and liabilities of a natural resources company are $100 million and $82 million, respectively. However, the fair value of assets and liabilities of the company are $112 million and $86 million, respectively. The asset-based valuation of the equity of the company is closest to:

        • $18 million
        • $26 million
        • $112 million
      • Avatar of scarebaerscarebaer
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          • CFA Level 2
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          So A – L = E. The “asset-based” approach is described as the fair market value of the company. Or more logically – What it would cost to recreate the business. So in this case $112 – 86m = 26m. Answer B 

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