For each of the statements below, indicate whether the statement is True or False AND provide one or two explanatory sentences to support your answer.

a. In New Zealand, the Capital Asset Pricing Model (CAPM) that is used to compute the cost of equity capital adjusts the risk free rate for the average investor tax rate but this adjustment is not made for the risk free rate component in the post-tax market risk premium.

b. Reinvestments in the firms net operating assets are deducted from NOPAT to arrive at free cash flows to the firm to maintain the firms operating capability and to grow the firm.

c. To ensure the free cash flows in the perpetuity (terminal) period grow at a constant terminal growth rate g, the relationships between components in the income statement and balance sheet must be the same in the last year of the horizon period and first year of the perpetuity (terminal) period.

d. When using the market multiples approach to value the targets firm/enterprise value, we would use multiples based on comparable companies net profit after tax and book value of equity and apply these multiples to the target firms net operating profit after tax and net operating assets.