Which of the Following Is a Valid Issue in Implementing

question 122

Multiple Choice

Which of the following is a valid issue in implementing the dividend growth model? The model

• A) is too complex to be used to estimate value.
• B) does not require an accurate estimate of the rate of growth in future dividends.
• C) is based upon the assumption that dividends are expected to grow at a constant rate forever.
• D) both A and C.

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Definitions:

Incremental Effect

The impact of a particular decision on a company's finances, considering only the changes that directly result from the decision.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.

Fixed Expenses

Costs that do not change in total regardless of changes in the level of business activity or volume.

Annual Cash Inflow

The total amount of money being received into a business from all sources over the course of a year.