According to the dividend growth model,if a company were to declare that it would never pay dividends,its value would be
A) Based on earnings.
B) Based on expectations regarding.
C) Higher than similar firms since it could reinvest a greater amount in new projects.
D) Zero.
E) Based on the capital asset pricing model.

Question

Quizplus · Accepted Answer

The dividend growth model values a company based on the present value of its expected future dividends. If a company declares it will never pay dividends, the model suggests its value would be zero, as there are no expected future cash flows to discount.

According to the Dividend Growth Model,if a Company Were to Declare