INVESTMENTS (LOOSELEAF) W/CONNECT
11th Edition
ISBN: 9781260465945
Author: Bodie
Publisher: MCG
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Chapter 18, Problem 1CP
a.
Summary Introduction
To evaluate: The director’s statement based on constant-growth
Introduction:
Constant-growth dividend discount model: This model is created by Mr. Gorden. This is also called as “Gorden growth model”. According to this model, it is assumed that the company exists forever and will pay dividends per share with an increase at a constant rate.
b.
Summary Introduction
To evaluate: The change in sustainable growth rate and growth in book value due to an increase in dividend payout.
Introduction:
Sustainable growth rate: It is supposed to be maximum rate of growth that a company can sustain without a growth in finance through debt or equity.
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Chapter 18 Solutions
INVESTMENTS (LOOSELEAF) W/CONNECT
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