Analysts in the investment banking industry multiply rental expenses by 8 times to approximate asset value.Although based on reasonable assumptions,the method is very simple and can both overvalue and undervalue the leased assets.

Question

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The statement is true as the method of multiplying rental expenses by 8 times to approximate asset value is a simple method and can lead to both overvaluing and undervaluing the leased assets.

Analysts in the Investment Banking Industry Multiply Rental Expenses by 8