AIT is a high-tech start-up company that produces AI software that can help companies fine-tune their digital marketing campaigns. Both profits and cash flows just barely turned positive, and revenue is tiny. Management is optimistic that income and profits will grow tremendously in the next few years. VC suggests valuing the company based on the Price Earnings (PE) ratio multiplied by its latest historical Net Income. It will value AIT at the same PE as similar listed companies. CEO suggest valuing the company based on a discounted cash flow method, valuing AIT cash flows in the coming years.

Appraise the 2 approaches & choose the method that is more appropriate in the valuation of AIT, providing reasons.