If You Want to Value a Firm That Consistently Pays

question 50

Multiple Choice

If you want to value a firm that consistently pays out its earnings as dividends,the simplest model for you to use is the:

• A)enterprise value model.
• B)total payout model.
• C)dividend discount model.
• D)discounted free cash flow model.

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Definitions:

Regression Line

A straight line that best fits the data on a scatterplot, showing the average relationship between the independent and dependent variables.

Slope

The gradient or tilt of a line on a graph, indicating the relationship between two variables.

Y-Intercept

This refers to the point on a graph where the line crosses the Y-axis, typically representing the value of the dependent variable when the independent variable is zero.

Regression Equation

A mathematical formula used to predict a value of a dependent variable based on the value(s) of one or more independent variables.