All else the same, the higher the discount rate applied to a company’s future cash flows the {lower, higher, same} its share price:     higher     lower     same

Q: Relative evaluation models least likely include: a) Dividend growth rate b) Book value of…

A: In relative model , the valuation of companies is done on the basis of relative financial…

Q: Exhibit 22.2 Hedging Business Risk with a Forward Contract Value at date T Cash flow The 'hedge'…

A: A forward agreement is a tweaked contract between two parties to trade a resource at a predetermined…

Q: Is it because: a. The capital gain will be different because the dividend did not change. or…

A: Capital gain can be calculated s follows: Capital gain=(Sale price - Cost price)Cost price* 100

Q: The constant growth dividend discount model (DDM) may be written as fo=D₁/(P₁ + 8) Po=D₁/(r₁-8) P =…

A: Dividend Discount model is used for calculation of current market price per share based on future…

Q: 1. When does the concept of "undervalued" and "overvalued" arise? How can you increase or decrease…

A: When you invest in stock market than you need to think properly and with financial security and…

Q: When a firm has growth that only meets, rather than exceeds, the cost of capital, we would expect…

A: The objective of the question is to identify the correct factor that the price-earnings (P/E)…

Q: Explain what ‘short selling’ means and how short-sellers profit from a fall in share prices.

A: Short-selling refers to strategy in which the investor acts as a speculator in this strategy the…

Q: free cash flows

A: What Is a Leveraged Buyout? A leveraged buyout (LBO) is the acquisition of another company using a…

Q: Explain the Modigliani-Miller Payout Policy Irrelevance Proposition. What are the implications of…

A: Payout Policy refers to the manner of ways by which firm return out their part of the capital to…

Q: What is the reason for using a two-stage dividend growth model

A: The two-stage dividend discount model has two parts and assumes that dividends will grow at two…

Q: In comparison to free cash flow valuation, what's the main issue with dividend valuation?

A: Dividend discount model is a DCF model which assumes that the price of a stock should be equal to…

Q: Using the cost of new common​ stock, the​ firm's WACC is?

A: Cost of new common stock = 13.5512104904717% After tax cost of debt = 4.29106052668296% Cost of…

Q: 27. What are the advantages of the arbitrage pricing theory over the capital asset pricing model?

A: Both the arbitrage pricing theory (APT) and the capital asset pricing model (CAPM) are frequently…

Q: Which of the following statement is most correct? The cost of capital for internal common stocks is…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: What determines if a potentially dilutive security is dilutive or anti-dilutive? a. the share price…

A: Earning per share means the profit earned after taxes per share outstanding. Diluted earning per…

Q: What is the effect in the stock valuation if the growth rate increase by the same rate as the…

A: Stock can be defined as the type of financial instrument being offered by the companies or business…

Q: Which of the following will increase BOTH the operating leverage and the financial leverage? Assume…

A: Operating leverage and financial leverage are two key concepts that measure the extent to which a…

Q: Which of the following statement is least likely to be correct? - The WACC is used to find the…

A: WACC is the weighted average cost of capital. It represents the average cost of capital after tax of…

Q: The dividend discount model constant growth It is a method of evaluating dividends that assumes a…

A: Dividend discount model = Expected dividend / (cost of equity - growth rate)

Q: How do you set up a two-stage dividend growth model on excel?

A: Companies with an uncertain initial growth rate can be valued using the two-stage model. In the…

Q: In the simple Keynesian model of income determination, investment is O the buying and selling of…

A: in the Keynesian determination of national income there is mainly to methods which include saving…

Q: A firm has decided to switch from variables? Assume an inflationary environment. Net profit will: OA…

A: The inventory can be valued using various methods as LIFO, FIFO and weighted average method. FIFO…

Q: Pls solve soon i will give u 2 like instant Investors are most likely to use what type of valuation…

A: Valuation is a process by which analysts determine the present or expected worth of a stock,…

Q: Firm A generates more cash flow while taking less risk than Firm B. The stock price of Firm A should…

A: Stock also called shares or equity is ownership in a company. When you own stock in a company you…

Q: Assuming that the required rate of return is determined by the CAPM, explain how you would usethe…

A: Given: The required rate of return is determined by the CAPM and the dividend growth model to…

Q: In the context of the dividend discount model (DDM), a company can always increase its intrinsic…

A: The company is carrying activities for the purpose of increasing the overall returns. The returns…

Q: Evaluate following statement: “A lower dividend would result a lower share price.”

A: Dividend is distribution of profits to shareholders. Such distribution of profits to shareholders…

Q: When is potentially dilutive security​ anti-dilutive? A. The definition of diluted earnings per…

A: Equity shares and preference shares are the two basic types into which shares may be separated.…

Q: Which of the following statements is not correct? Group of answer choices A)Purchasing fixed assets…

A: A)Purchasing fixed assets using cash decreases the current ratio. Purchasing fixed asset using cash…

Q: The company’s cost of capital is also known as A. hurdle rate B. leverage rate C. return rate D.…

A: Stock valuation is the process of determining the intrinsic value of a company's stock or shares…

Q: provide a 2 unique problem with own solution in YIELD performance ratio with explanation. Use this…

A: Dividend Yield is calculated by dividing Dividend per share by Market Price per share. It is…

Q: 1 c) ' low dividend payout is desirable.' Justify.

A: A company pays dividends to its shareholders.   Some company pays dividend on a regular basis while…

Q: Which of the following factors tend to increase a company's P/E (price- to-earnings) ratio? Lower…

A: The P/E ratio, or Price-to-Earnings ratio, is a financial metric that represents the valuation of a…

Q: All else equal, as market interest rates fall, the present value of a future cash flow. the…

A: Present value is the equivalent today based on time value of money of the future cash flow that is…

Q: How is book value per share calculated? Explain why book valuesoften deviate from market values.

A: Book value per share is overall value of company’s assets on its balance sheet. It means the value…

Q: Book value per share is ____ oriented while market value per share is ____oriented. *   short term;…

A: The book value(BV) per share is derived by dividing the common capital with those shares of common…

Q: book value.”

A: Market value is the value that is determined by the forces that are external to the company such as…

Q: QUESTION 25 The constant growth valuation model approach to calculating the cost of equity assumes…

A: Constant Growth Valuation Model Approach assumes that a company's dividends are going to continue to…

Q: All stocks pay dividends, and therefore one can count on them having a dividend yield. OA. True OB.…

A: The company pays a part of its ptofit as Dividend and a part of profit is retained by the company…

Q: Weighted Average Cost of Capital (WACC) theory suggests there is an optimal capital structure.…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: how do we calculate dividend when there is eps retention ratio and dps retention ratio?

A: The dividend payment to the shareholders based on the company's earnings and its dividend payout…

Q: True/False: Dollar Cost Averaging can lower the average cost of your investment over time because…

A: Dollar cost averaging is also known as unit cost averaging. The dollar cost averaging method states…

Q: The beta risk of a share reflects the sensitivity of cash flow, earnings, and the share price to…

A: The beta of a stock or portfolio tells us how sensitive our holdings are to systematic risk.…

Q: share price

A: A dividend policy is essentially a policy a company employs to structure dividend payout to its…