Interview question - value a cow
Brainteaser / technical question: how to value a cow?
My thinking: using the same principles behind a DCF, a cow could be valued using the amount milk it could produce throughout its lifetime, plus the meat and leather it could produce once the time comes for that.
What I'm wondering is what the best way to discount that back to the present is - if at all - or if my thinking is way off here. Thoughts?
Yeah exactly that. Say same way you'd value anything else:
DCF - present value of future cash flows of cow (in this context value of milk it produces and leather/meat) as well as present value of terminal value (value of cow at end of forecast period. Tbh you could make an analogy here that you'd assume end of forecast period is when cow is killed so you use value of meat/leather).
Comps - median value of what other similar cows are worth. You could mention "industry specific" multiples like EV/Milk produced
Transactions - median value of what other similar cows were sold for.
Either way its not that deep it's just about showing you can apply to valuation methods to real life and you aren't just regurgitating 400Q answers.
Thanks so much! Huge help.
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