The constant perpetual growth model is applicable primarily to those firms which:
A) adhere to a residual dividend policy.
B) pay dividends that increase at a steady rate.
C) have irregular dividend growth rates.
D) maintain a constant dividend payout ratio.
E) have multiple rates of dividend growth.

Question

Quizplus · Accepted Answer

The constant perpetual growth model assumes a constant growth rate in dividends, which is applicable primarily to those firms that pay dividends increasing at a steady rate.

The Constant Perpetual Growth Model Is Applicable Primarily to Those