To ensure that the model is economically consistent,the continuing value formula should be applied when company operations are in a steady state.

Question

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Following the explicit forecasting period, the continuing value formula should be applied when the company’s margins, returns on invested capital, and growth are stable. If this is not the case, the explicit forecast period should be extended until a steady state is reached.

To Ensure That the Model Is Economically Consistent,the Continuing Value