What should an appraiser include in the report when using a commercial software program for DCF Analysis?

Including the name and version of the software program in the report is essential for several reasons. First, it ensures transparency in the appraisal process by clearly identifying the tools used to conduct the analysis. This allows others reviewing the report, including clients or regulatory bodies, to understand the context in which the analysis was performed.

Using a specific software program can impact the reliability and validity of the results. By disclosing the name and version, the appraiser can provide assurance that the data used aligns with current standards and methodologies. Additionally, software versions often include updates that could affect calculations or analytical features. Thus, stating this information helps convey whether the appraiser used the most current procedures and algorithms available.

This practice also aids in replicability; if another appraiser or client wishes to conduct a similar analysis, they can use the same software version to achieve comparable results, ensuring consistency in the appraisal process. Furthermore, mentioning the software version can indicate the level of sophistication of the analysis, as more advanced versions may offer enhanced capabilities for financial modeling.

While the total analysis results, a summary of DCF methodology, and disclosures regarding software limitations are also important, the specific identification of the software program is crucial for establishing the credibility and clarity of the appraisal report.