If a firm has leverage,it is best to use the total payout model to determine the firm's value.

Name: If a firm has leverage,it is best to use the total payout model to determine the firm's value.
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Quizplus · Accepted Answer

The total payout model assumes that the firm has no leverage, therefore it is not the best model to use for a firm with leverage. The best model in this case would be the adjusted present value (APV) model or the weighted average cost of capital (WACC) model.

If a Firm Has Leverage,it Is Best to Use the Total