| An argument against using the residual income (RI) valuation approach is that: 
 
 
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| A) | the models rely on accounting data that can be manipulated by management. |  |  
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| B) | terminal value does not dominate total present value as is the case in dividend and free cash flow valuation models. |  |  
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| C) | the models focus on economic rather than just on accounting profitability. |  |  
 
 
An argument against using the RI approach is that the models rely on accounting data that can be manipulated by management. Both remaining responses are arguments in favor of the approach. |