What are assumptions of walters dividend model, Financial Management

Q. What are assumptions of Walters dividend model?

1. Constant Return and Cost of Capital: - The Walter' model presume that the firm's rate of return and its cost of capital are constant.

2. Internal Financing: - All financing is complete through the retained earnings that is external sources of funds like debt or new equity capital aren't used.

3. 100% Payout or Retention: - Every earnings are either distributed as dividends or reinvested internally immediately.

4. Constant Earnings per share as well as Constant Dividends per share:-

There is no change in key namely, variables, beginning earnings per share and dividend per share.

5. Infinite Time: - The firm has a extremely long life.

Walter's Formula for formative the value of a share:-

D + r / Ke (E-D)

Where P = Market price per share

D = Dividend per share

E = Earnings per share

r = Internal Rate of Return

K = Cost of Equity Capital or Capitalisation Rate e

Posted Date: 8/5/2013 3:24:25 AM | Location : United States







Related Discussions:- What are assumptions of walters dividend model, Assignment Help, Ask Question on What are assumptions of walters dividend model, Get Answer, Expert's Help, What are assumptions of walters dividend model Discussions

Write discussion on What are assumptions of walters dividend model
Your posts are moderated
Related Questions
Buying and Selling Securities One of the key features that may occur while investing in financial markets is that sometimes investors overlook the essential factors they should c

Q. Benefits of Interest rate swaps? Interest rate swaps may provide several benefits to companies including: - The ability to get finance at a cheaper cost than would be p

Based on the period involved in repayment of the debt obligations, the debt instruments could be classified into long-/medium-/short-term debt instruments.

P Company manufactures and sells a range of children's clothing through its retail shops and is currently designing a website in order to allow customers to purchase products onlin

evaluate the importance of leverage in a small scale companyestion..

I nvitation of bids and bid publicity In previous sub section we learnt how the bid capacity for works and goods are calculated. We discussed how to prepare the bid documents,

Stock A has settled into a constant dividend growth pattern of 6 percent per year. The current dividend is $1.50, its current price is $15.90. You are an analyst and believe that

Question 1: In the financial system, the capital markets consist of the Bond and the Equities Market. Develop this statement. Question 2: (a) Discuss why banking regula

Steps involved in the Process of Securitization The following are the major steps involved: The lender (also called the originator) - in th

The holder of a corporate debt instrument is preferred to equity shareholders in the bankruptcy proceedings. However, secured/senior creditors are preferred to no