Under the Walter Model, if the rate of return is greater than the cost of capital, then what should be the impact of it?
A. These firms are called growth firms, they should have a hundred per cent payout ratio
B. These firms are called growth firms, they should have a zero payout ratio
C. The firm is indifferent towards how much is to be retained and how much is to be distributed among the shareholders
D. There is no method to show relationship between returns and cost under Walter's Model
Answer: Option B
This Question Belongs to Commerce >> Business Finance
The appropriate ratio for indicating liquidity crisis is
A. Operating ratio
B. Sales turnover ratio
C. Current ratio
D. Acid test ratio
A. Net present value method
B. Internal rate of return method
C. Profitablity index method
D. None of the above
A. a-4, b-3, c-1, d-2
B. a-3, b-4, c-1, d-2
C. a-2, b-3, c-1, d-4
D. a-3, b-2, c-4, d-1
Which one of the following assumptions is not included in the James E. Walter Valuation model?
A. All financing by retained earnings only
B. No change in the key variables such as EPS and DPS
C. The firm has finite life
D. All earnings are either distributed as dividends or invested internally immediately
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