Which of the Following Statements Is Correct

question 75

Multiple Choice

Which of the following statements is correct?

• A) The constant growth DCF model can be used to value a stock only if the stock's dividends are expected to grow forever at a constant rate which is less than the required rate of return on the stock.
• B) If the growth rate is negative,the constant growth DCF model cannot be used.
• C) The constant growth DCF model may be written as r₀ = D₀/P₀ + g.
• D) The constant growth DCF model may be written as P₀ = D₀/(r + g).
• E) The constant growth DCF model may be written as P₀ = D₀/(r − g).

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Definitions:

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A chart used by employers to determine the amount of tax to withhold from an employee’s paycheck based on their earnings and tax bracket.

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Taxes levied by the government on the income earned by individuals, corporations, trusts, and other legal entities.

Merit Rating

A system used to evaluate the performance of employees by systematically rating them on their abilities and achievements within the organization.

State Unemployment Taxes

Taxes paid by employers to fund the state unemployment compensation programs for laid-off workers.