Disadvantages of the comparable industry method of valuation include the presumption that industry multiples are actually comparable and that analysts' earnings projections are unbiased.

Question

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The comparable industry method of valuation assumes that industry multiples are comparable, but factors such as differences in company size, growth prospects, and financial structure can affect multiples. Additionally, analysts' earnings projections may be influenced by bias or lack of information, which can affect the accuracy of the valuation.

Disadvantages of the Comparable Industry Method of Valuation Include the Presumption