Which Statement Is Correct

question 33

Multiple Choice

Which statement is correct?

• A) the dividend discount model is no longer applicable when there are stock repurchases.
• B) when valuing free cash flow per share it is important to include both dividends per share and the cash received from repurchases.
• C) shareholders like dividends because it is the only way that they can get their hands on cash.
• D) if capital investment and capital structure are held constant, smaller dividends mean larger repurchases.

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Definitions:

Double Diminishing-Balance

A method of accelerated depreciation which charges depreciation at a higher rate in the early years of an asset's life.

Accumulated Depreciation

The total amount of an asset's cost that has been allocated as depreciation expense over its useful life.

Retroactive Changes

Adjustments made to records, policies, or financial statements that apply to previous periods.