medium · Private Equity pe-core
A buyer is valuing a $20M earnout payable in Year 2. The probability-weighted expected payout is $9.75M.
If the buyer uses a 10% discount rate to reflect the time value of money and performance risk, what is the fair value of the earnout to be recorded at closing?
- $16.53M
- $8.06M
- $9.75M
- $8.86M
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