1. Which of the following would be the best method to forecast interest expense on a pro forma income statement?

Assume interest will grow at the same rate as sales.

Forecast debt on the balance sheet, then multiply that by the cost of debt to get the interest expense.

Assume interest will grow at the same percent it has in the past regardless of debt levels.

2. An effective forecast model must be based on a thorough understanding of a companys business, management, strategy, external environment, and historical results.

true or false

3. A top-down approach for developing inputs to equity valuation models begins at the level of the individual company or a unit within the company.

true or false