If you want to value a firm that consistently pays out its earnings as dividends, the simplest model for you to use is the A) enterprise value model. B) method of comparables. C) dividend-discount model. D) discounted free cash flow model.

answer

watching

243

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Bunny GreenfelderLv2

29 Sep 2019

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

Chapter 13 discusses several different ways to determine equity valuation. This presentation provides far more detail than that from your previous corporate finance growth with its emphasis on the Constant Growth- Dividend Discount Model. To properly manage an investment portfolio containing equities, it is important for you to be clear about how you will value equities and the differences between the calculations and assumptions of the various methods. POST: From the choices provided in the text; Valuation by comparables, Intrinsic value vs. Market Price, Constant Growth Dividend Discount Model, Multistage Growth Models (Two-State DDM), P/E Ratios and Growth (The PEG Ratio), Free Cash Flow, Select the valuation method that you believe most accurately provides a valuation suitable for the largest categories of stocks.

lavendergnat554

Which of the following five statements are correct?

Successful young firms often have high initial earnings growth rates.

If you want to value a firm that consistently pays out its earnings as dividends, the simplest model for you to use is the enterprise value model.

The price of a share of stock is equal to the present value of the expected future dividends it will pay.

During periods of high growth, it is not unusual for firms to pay out 100% of their earnings to shareholders in the form of dividends.

Free cash flow measures the cash generated by the firm after payments to debt or equity holders are considered.

Which of the following five statements are correct?

The 95% confidence interval for the expected return is defined as the Historical Average Return plus or minus three standard errors.

In finance, the variance of a return is also referred to as its volatility.

A riskaverse investor will avoid investing in stocks.

If the risk of an investment can be reduced by diversification, then investors will not be compensated with a risk premium for this risk. The risk premimum is only related to the undiversifiable systematic risk of an investment.

According to the research by Eugene Fama, Nobel Laureate in Economics, it is very difficult to predict stock price movements in the short run.

You have been asked to perform a stock valuation prior to the annual shareholders meeting next week. The two models youâve selected to value the firm are 1) the dividend discount model and 2) the discounted cash flow model. Explain why the estimates from the two valuation methods differ. Address the assumptions implicit in the models themselves as well as those you made during the valuation process. Also, explain why these prepared estimates may differ from the actual stick price today, or any given day.

Weekly leaderboard

Home

Homework Help 3,900,000

Finance 370,000