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Josh Lacy, CFA, is analyzing a portfolio company held by his private equity firm to estimate its value in liquidation. Lacy should most appropriately use a(n):

A asset-based approach.

The asset-based approach uses either the liquidation values or fair marker values of assets. The discounted cash flow approach involves calculating the present value of expected future cash flows. The comparables-based approach uses market or private transaction values of similar companies to estimate multiples of EBITDA, net income, or revenue.