A variable growth rate:
A) is a valuation technique used when a firm's current growth rate is expected to change sometime in the future.
B) combines the present-value cash flow equation and the constant-growth-rate model equation.
C) both a and b
D) neither a or b

Question

Quizplus · Accepted Answer

A variable growth rate is indeed a valuation technique used when a firm's growth rate is expected to change in the future, and it combines elements of the present-value cash flow equation with the constant-growth-rate model to accommodate changing growth rates over time.

A Variable Growth Rate