Question: This passage below require analysis and breakdown The two models used to value a firm, in the long run, are the dividend discount model and
This passage below require analysis and breakdown
The two models used to value a firm, in the long run, are the dividend discount model and discounted cash flow model. These two methods help determine a companys cash flow within these two methods to create excellent organization skills (Brigham & Ehrhardt, 2014). The dividend discount model is a method used to calculate a firms stock price based on theory. When the calculations are done, the stock will be totaled to get evenly divided through a value of future expenses (Brealey & Myers, 2003). The discounted cash flow model is a method to determine the total amount of future cash flows. Through the annual reposted, the analysis is done through experts to see how much money will be within the future (Brealey & Myers, 2003). These two methods are used differently by stakeholders because every firm has its way of calculating cash flow. The dividend discount model is used by firms to calculate stocks, and a discounted cash flow method to estimate and analyze the cash flow of the upcoming future expenses (Brigham & Ehrhardt, 2014).
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