According to course materials, dividend growth model is simple to use but suffers from the following drawback(s): OA. It assumes a constant growth rate. OB. It is not easy to forecast the growth rate OC. Both A and B OD. Neither A or B
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- When using the two - stage dividend growth model,:Multiple Choiceg1 cannot be negative. Pt = Dt/R. g1 must be greater than g2. g1 can be greater than R. R must be less than g1 but greater than g2.An increase in a firm's expected growth rate would cause its required rate of return to O a. fluctuate less than before. O b. increase. c. decrease. d. possibly increase, possibly decrease, or possibly remain constant. O e. fluctuate more than before.Which of the following assumptions would cause the constant growth stock valuation model to be invalid? The constant growth model is given below: P0 = D0(1+g)/rs - g Select one: a. The growth rate is more than the required rate of return b. The growth rate is negative c. The growth rate is zero d. None of the assumptions would invalidate the model e. The growth rate is less than the required rate of return
- When modeling the expected return of an income producing property, why should it be defined, for example, a correlation of -0.60 between the NOI growth and the vacancy rate? a. To increase the probability that the computer draws higher values of NOI growth when it draws higher values of vacancy, from their respective distributions, and vice versa. b. To increase the probability that the computer draws lower values of NOI growth when it draws lower values of vacancy, from their respective distributions, and vice versa. c. To increase the probability that the computer draws lower values of NOI growth when it draws higher values of vacancy, from their respective distributions, and vice versa. d. Both “b” and “c” e. To increase the probability that the computer draws NOI growth values that are 60% as large as the vacancy values.A firm has decided to switch from FIFO to LIFO. Ceteris paribus (all things being equal), what impact will the change in accounting have on the following variables? Assume an inflationary environment. Net profit will: OA increase OB decrease OC not change OD. cannot determineCould you use formulas in order to get those answers, like the images I have attached to this follow-up questions?
- Which of the following statements is false? (You may select more than one answer.)a. The payback period increases as the cost of capital decreases.b. The simple rate of return will be the same for two alternatives that have identicalcash flow patterns even if the pattern of accounting net operating income differsbetween the alternatives.c. The internal rate of return will be higher than the cost of capital for projects thathave positive net present values.d. If two alternatives have the same present value of cash inflows, the alternative thatrequires the higher investment will have the higher project profitability index.Please step by step solutionsDCF Methodology can be applied even if growth is not constant. Group of answer choices True False
- 4. In the context of one-stage DCF valuation models, we must never forecast a growth rate greater than the cost of equity. a- true b - falseDifferences between the ERR and the IRR include the following: a. The ERR will yield a unique solution (no multiple rates of return as in the IRR) b. In the ERR, funds recovered from the investment are assumed to earn returns equal to the MARR c. The ERR is always a value somewhere between the IRR and the MARR d. All of the above.If the duration gap is zero, then the market value of equity is ____________ interest rates.A. increased due to an increaseB. increased due to a decreaseC. decreased due to an increaseD. immunized from changes