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    Dividend-Discount Model

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    Discuss the tradeoff between dividends and growth; elaborate on the use and limitations of the Dividend-Discount model.

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    Dear Student,

    Tradeoff between dividends and growth.
    The tradeoff between dividends and growth means that companies have the option either to give away the profits of the business as dividends or take the opportunity to keep the profit for investments and earnings so that a company can grow.

    The decision of whether to give dividends or retain profits for growth is a very difficult decision for the company because it has to satisfy the stockholders and also has to take account ...

    Solution Summary

    This solution discusses the tradeoff between dividends and growth. Additionally, this solution highlights the limitations of the Dividend-Discount model for projecting the future dividend growth of an organization.