A Parable of Valuation

I came across a simple illustration of valuing a company through the use of a parable.

I hope you will enjoy it as much as I do.:)

The Old Man and the Tree: A Parable of Valuation

Adapted from Solomon, Schwartz & Bauman,
Corporations – Cases and Materials at 143 (3d ed. 1996).

*****

Once there was an old, wise man who owned an apple tree. It was a fine tree. With modest care it yielded a crop of apples which he sold for $100 each year. The man wanted money for new pursuits and thought of selling the tree. So, hoping to teach a good lesson, he placed an ad in the Business Opportunities section of the Wall Street Journal: “For sale, apple tree – best offer.”…..

The Old Man and the Tree: A Parable of Valuation

For more useful information about value investing you can visit John Chew’s website: http://csinvesting.wordpress.com/

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