If you want to value a firm that has consistent earnings grow,but varies how it pays out these earnings to shareholders between dividends and repurchases,the simplest model for you to use is the:
A) enterprise value model.
B) dividend discount model.
C) total payout model.
D) discounted free cash flow model.

Question

Quizplus · Accepted Answer

The total payout model would be the best choice for valuing a firm that has consistent earnings growth but varies how it pays out these earnings to shareholders between dividends and repurchases. This model takes into account both dividends and stock repurchases as forms of payout to shareholders, and assumes that the total payout ratio (dividends plus stock repurchases as a percentage of earnings) will remain constant over time.

If You Want to Value a Firm That Has Consistent