The Market Comparable analysis is usually conducted with actual financial statements and other performance variables, however, this same analysis is often times used with forecasted measures as well.

- This statement is true

Yes, it is true that the Market Comparable analysis is usually conducted with actual financial statements and other performance variables; however, this same analysis is often times used with forecasted measures as well. This is done through trend forecast or linear forecast method.

The most important factor in a quality forecast is that the forecast reflect observed historical relationships.

-              This statement is false

The quality forecast is not based on historical data.

The Perpetuity Growth Method is used to assess a firm’s continuing value by forecasting the post-planning period’s Equity Free Cash Flow and dividing that value by the weighted average cost of capital minus the growth rate.

-              This statement is true

The Perpetuity Growth Method;

The firm's horizon or continuing value in the terminal year;

Terminal value (TV) = FCF * (1+g) / (WACC- g)

Where,

TV = terminal value

FCF = free cash flow

g = perpetual growth rate of FCF

WACC = weighted average cost of capital

The value of operations should be adjusted by mid-year discounting because present value calculations assume that all cash flows occur at the beginning of the year.

- This statement is false

The present value calculations assume that all cash flows occur at the end of the year

The Economic Value Added (EVA) model is best used for companies that use International Accounting Standards.

- This statement is false

The Economic Value Added (EVA) model considers all the costs including the cost of equity capital which is ignored in normal accounting.