How Is It Possible to Ignore Cash Dividends That Occur

question 87

Multiple Choice

How is it possible to ignore cash dividends that occur far into the future when using a dividend discount model? Those dividends:

• A) will be paid to a different investor.
• B) will not be paid by the firm.
• C) have an insignificant present value.
• D) ignore the tax consequences of future dividends.

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Definitions:

Viable Projects

Projects that are capable of succeeding or surviving, especially in terms of profitability or development.

Own Capital

Refers to the resources, financial or otherwise, that are personally invested by the owners into their business or project.

Moral Hazard

The risk that one party to a transaction has the incentive to take undue risks because the cost will fall on the other party.

Monitoring Solution

A monitoring solution refers to a system or set of tools designed for continuously observing and reporting on the health, performance, or other key metrics of software applications, IT infrastructure, or any environmental conditions.