The Constant-Growth Dividend Model Tells Us That the Current Price

question 52

True/False

The constant-growth dividend model tells us that the current price of a share is the next period divided by the difference between the discount rate and the dividend growth rate.

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Definitions:

Standard Price

The predetermined cost of a single unit of product or service, used in budgeting and to measure efficiency.

Direct Labor Rate Variance

The difference between the expected cost of direct labor and the actual cost incurred, based on the rate paid per hour.

Direct Labor Time Variance

The difference between the actual time spent on production and the estimated standard time, multiplied by the standard labor rate.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or budgeted) cost, based on standard rates and actual hours worked.