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

Ask an Expert

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

Write your message here..

Related Questions

Barriers of shrm implementation, Q. Barriers of SHRM Implementation? Ba... Q. Barriers of SHRM Implementation? Barriers of SHRM: barriers to successful SHRM implementation are complex. The main reason is a lack of growth strategy or failure to impleme

par value, The face value of the debt security can be thought of as ... The face value of the debt security can be thought of as the principal amount on which interest is paid by the issuer. It is the amount the issuer is willing to r

Risk-free rate, Assume you manage a $4.42 million fund that having of four ... Assume you manage a $4.42 million fund that having of four stocks with the following investments: Stock Investment Beta A

What do you signify by cash, Q. What do you signify by Cash? Cash :- Fo... Q. What do you signify by Cash? Cash :- For the motive of cash management the term cash not only includes cheques, bank drafts, coins, currency, notes, demand deposits with ban

Advantages and the disadvantages of a new stock issue, What are the advanta... What are the advantages and the disadvantages of a new stock issue? A new stock issue increases funds and decreases the riskiness of the firm.  It as well tends to send a negat

Role of Trustee in Pension Fund, Role of Trustee in Pension Fund: Trust... Role of Trustee in Pension Fund: Trustees are people in control of long-term asset allocation of a pension scheme. Whatever benchmark they set will, as we shall see, influence

Calculate amount of first coupon payment your organization, Your firm has p... Your firm has presently issued five year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4%.  What is the amount of first coupon payment your organization will pa

Margin trading, Margin Trading: Suppose an investor wants to buy 100 Re... Margin Trading: Suppose an investor wants to buy 100 Reliance Energy shares, whose market price is Rs.500. This transaction requires Rs.50,000 but the investor has only Rs.30,0

Alternative summarised version of tests of controls, Alternative summarised... Alternative summarised version of tests of controls · Segregation of duty (staff records are separate from wages department) · Documentation ( written evidence ) ·

Constructing synthetic swaps, (a) Prior to FAS 133 if companies qualified ... (a) Prior to FAS 133 if companies qualified for hedge accounting their hedges were assumed to be perfect-no valuation or testing required. Currently under FAS 133 risk managers se