If You Want to Value a Firm That Has Consistent

question 65

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.
• E)net present value model.

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Definitions:

FICA Social Security

A U.S. government program funded through payroll taxes that provides benefits to retirees, disabled individuals, and survivors.

FICA Medicare

FICA Medicare refers to the portion of the Federal Insurance Contributions Act tax that is designated for Medicare, providing health insurance for individuals over 65 and some younger people with disabilities.

Gross Pay

The total amount of money earned by an employee before any deductions or taxes are applied.

Regular Rate

The hourly pay rate that is used to calculate overtime pay for non-exempt employees according to the Fair Labor Standards Act (FLSA).