To use a dividend valuation model, a firm must have a constant growth rate, and the discount rate must not exceed the growth rate.
The growth rate does not necessarily have to be constant, and the discount rate must always exceed the growth rate.

Question

Quizplus · Accepted Answer

In a dividend valuation model, the growth rate can be constant or variable, but the discount rate should always exceed the growth rate to make the formula meaningful.

To Use a Dividend Valuation Model, a Firm Must Have