Which of the following is a disadvantage of the dividend growth model when estimating the cost of equity?
A) It applies only to firms whose dividend growth rate fluctuates widely.
B) It only applies to companies which are not currently paying dividends.
C) It explicitly considers risk.
D) The estimated cost of equity is highly sensitive to the estimated growth rate.
E) It does not use discounted cash flow techniques.
Correct Answer:
Verified
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