If You Want to Value a Firm That Has Consistent

question 79

Multiple Choice

If you want to value a firm that has consistent earnings growth,but varies how it pays out these earnings to shareholders between dividends and repurchases,the simplest model for you to use is the:

• A)enterprise value model.
• B)dividend discount model.
• C)total payout model.
• D)discounted free cash flow model.

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Definitions:

Government Expenditures

The total amount spent by the government for its operations, public services, and social welfare programs.

Aggregate Spending

The total spending on goods and services in an economy at a given overall price level and in a given time period.

Marginal Propensity

The ratio of change in an economic variable, such as consumption or saving, to a change in another, like income.

Consumption Spending

The total amount of money spent by households and consumers on durable goods, nondurable goods, and services.