To Use a Dividend Valuation Model, a Firm Must Have

question 60

True/False

To use a dividend valuation model, a firm must have a constant growth rate, and the discount rate must not exceed the growth rate.
The growth rate does not necessarily have to be constant, and the discount rate must always exceed the growth rate.

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Definitions:

"S" Corporation

A type of corporation in the United States that meets specific Internal Revenue Code requirements, allowing profits to be taxed only at the shareholder level, not at the corporate level.

Legal Dissolution

The process of legally dissolving a corporation or partnership, effectively ending its existence.

Withdrawal

The act of removing funds from an account, or the act by an owner of taking assets out of a business for personal use.

Total Assets

The sum of all resources owned by a company having economic value, as reported on the balance sheet, including both current and long-term assets.