Conceptually,why Should an Analyst Expect the Dividends Valuation Approach to Yield

question 20

Essay

Conceptually,why should an analyst expect the dividends valuation approach to yield equivalent value estimates to the valuation approach that is based on free cash flows available to be distributed to common equity shareholders?

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Definitions:

Marginal Analysis

An examination of the benefits and costs of certain activities or financial decisions.

Marginal Analysis

A technique used in economics to examine the benefits of adding one more unit of a good or service.

Marginal Cost

The cost incurred by producing one additional unit of a product or service.

Marginal Benefit

The additional satisfaction or utility gained by consuming an additional unit of a good or service.