constant growth Vs. multi stage growth model for valuation
Not what you're looking for?
Under what conditions would you use a two-or three-stage cash flow model to value a company rather than the constant-growth model?
Purchase this Solution
Solution Summary
Answers a conceptual question on which valuation model is appropriate under various situations. Three models discussed are DCF models with constant growth, two stage growth and three stage growth (280 words).
Solution Preview
Constant growth model: The constant growth model is used to value firms that are growing at a stable-growth rate i.e. in steady state. The growth rate used in the model has to be reasonable, relative to the nominal growth rate in the economy in which firm operates. The stable growth rate of the firm cannot exceed the economy growth rate in which firm operates by more that one or two percent. In addition, the firm is ...
Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Motivation
This tests some key elements of major motivation theories.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.