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CAPM, Dividend Growth or APT: Rate of Return Estimate

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Which of the three models (dividend growth, CAPM, or APT) is the best one for estimating the required rate of return (or discount rate) of Safeway?

In your paper include discussion of the following issues:

1. Ease of use of these three models
2. Accuracy of each of these three models
3. How realistic the assumptions of each model are
4. Why did you select your model?

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Solution Summary

This solution of 284 words discusses the different characteristics of the dividend growth, CAPM or APT model.

Solution provided by:
Jayant Kumar, MBA
Education
  • MBA, Indian Institute of Finance
  • Bsc, Madras University
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