Question

You can estimate the value of a company’s stock using models such as the corporate valuation model and the dividend discount model. Which of the following companies would you choose to evaluate if you were using the discounted dividend model to estimate the value of the company’s stock?

Answer 1

Answer: Using the discounted dividend model to estimate the value of the company’s stock, I will choose to evaluate a company that is not expected to distribute any earnings to its stockholders for the next few years.