Trend Line‐Projected Method – this method is similar to the static method but is most appropriate where growth will continue to occur at a declining rate. This method is most appropriate if the most recent year’s earnings significantly increases or decreases, or if the company has demonstrated consistent increases or decreases in earnings and these trends can reasonably be expected to continue. Projected Growth Rate in Earnings Method – this method assumes that there is growth in earnings at a constant rate and is most appropriately used when historical earnings suggest a consistent trend that the valuator feels has a high probability of continuing.
Page 84 of 141 The valuator chose to use a 3 year weighted average as a baseline for earnings.
