You want to use the constant growth model to estimate the price of a firm’s common...
You want to use the constant growth model to estimate the price of a firm’s common stock. What conditions need to be met in order to use this model?
- The required return must exceed the growth rate.
- The firm should be in a steady state (mature industry).
- Both A and B must be met.
- No conditions must be met
Homework Answers
The following conditions need to be met in order to use the constant growth model:-
C. Both A and B must be met.
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