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Market Sizing

Anonymous A asked on May 28, 2019

Hi everybody,

I encounered a case that asked me to quantify the value of a cow. How would you do it ?

Thanks in advance !

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Ian
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replied on May 28, 2019
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Hi!

You'll really get the best out of this exercise if you try it yourself. Why don't you post what you're thinking and we can help?

Hint: What's the lifecycle of a cow?

Anonymous updated his answer on Jun 03, 2019

Hi,

indeed, I would suggest you come up with your own thoughts first. Nevertheless, I would suggest you start by asking yourself which valuation methodologies make sense in this context. Some first thoughts on this include:

„Discounted“ Cash Flow

  • Revenues – Ask yourself what revenue streams a cow could produce over its lifetime. Be creative! For example:
    • Milk production
    • Riding (rent income)
    • Meat production (at end of life)
  • Costs
    • investment costs
    • maintenance cost, costs of raising the cow
    • Rent / housing costs if applicable
  • Discounted profits
    • Then calculate the yearly profits of owning the cow and discount them back to the present to get the net present value

Replacement value

  • What does it cost to buy a cow?

Precedent transactions

  • For which price did comparable cows sell in the recent past?

„Liquidation“ value

  • How much money could you make if you sell the component parts of the cow, i.e. the meat?

Hope this helps :)

Best regards

(edited)

Serhat replied on May 31, 2019
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Hi there,

Happy to improve your answer. Would you want to try your best first?

Best

Serhat

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