Chapter 33 Value

The value of any asset is subjective. It is worth what someone is willing to pay for it. People may use similar methodologies to value an asset and arrive at the same conclusion, but at times of greater uncertainty they may not. With the recent plethora of high tech and innovative early stage companies in the economy, people may value these companies on their longer term potential more so than on their near-term expectations, this is different than they would value more mature companies. People may consider what an asset cost to make or cost previously to buy, this may add to a buyer’s knowledge, but this sunk cost does not determine the value, it just may give the potential buyer some insight as to what price the seller may ...

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