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:

Fixed Supply

A situation where the quantity of a good, service, or resource is limited and cannot be changed in the short run, often leading to inelastic supply.

Supply Curve

A graph showing the relationship between the price of a good and the quantity of that good that sellers are willing to supply.

Perfectly Inelastic

Describes a situation in which the quantity demanded or supplied does not change in response to a price change.

Demand Determined

implies that the quantity and price of goods and services are decided by the consumers' demand or preferences in the market.