Which combination of the following represents the assumptions of the Walter's dividend model?
1.The company has a very long or perpetual life.
2. All earnings are either reinvested intemally or distributed as dividend.
3. There is no floatation cost for the company.
4. Cost of capital of the company is constant.
Select the correct one:
A. 1, 2 and 3
B. 2, 3 and 4
C. 1, 2 and 4
D. 1, 3 and 4
Answer: Option A
This Question Belongs to Commerce >> Business Finance
Related Questions on 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-4, b-3, c-1, d-2
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
Join The Discussion