If you want to value a firm that has consistent earnings growth,but varies how it pays out these earnings to shareholders between dividends and repurchases,the simplest model for you to use is the:
A)enterprise value model.
B)dividend discount model.
C)total payout model.
D)discounted free cash flow model.

Question

Quizplus · Accepted Answer

The total payout model is the most appropriate model to use in valuing a firm that varies how it pays out earnings to shareholders between dividends and repurchases. This model takes into account both the dividends and share repurchases to determine the total payout to shareholders. It's a simpler model compared to enterprise value or discounted free cash flow models which are more complex and may not be necessary for a firm with consistent earnings growth. The dividend discount model is not suitable in cases where the firm varies its payout method.

If You Want to Value a Firm That Has Consistent