The pure play method attempts to identify publicly traded firms that are engaged solely in the same business as the project or division.

Question

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The statement is true. The pure play method is a valuation technique that involves identifying publicly traded firms that have similar business operations and risks as the project or division being evaluated. This allows for a more accurate estimation of the project's cost of capital and risk-adjusted cash flows. The firms identified should only be engaged solely in the same business as the project or division, thus the term "pure play."

The Pure Play Method Attempts to Identify Publicly Traded Firms