Describes the gordons dividend model, Financial Management

Assignment Help:

Q. Describes the Gordons dividend model?

Gordon's Model: - Gordon's model is one more theory which contends that dividend policy is relevant for the value of the firm. Alternatively the dividend decision of the firm affects the value of the firm.

Assumptions:-

(i) No External Financing: - Gordon's model presumes that no external financing is available and retained earnings are the merely source of finance.

(ii) All-Equity Firm: - This model presumes that the firm is an all equity firm and it has absolutely no debt.

(iii) No Taxes: - Corporate taxes don't exist

(iv) Perpetual earnings: - it is presumed that the firm has perpetual life and their streams of earnings are also perpetual.

(v) Constant Internal Rate of Return: - An internal rate of return of the firm is presumed to be constant.

(vi) Constant Cost of Capital: - The cost of capital of the firm is presumed to be constant.

(vii) Constant Retention Ratio: - The retention ratio one time decided upon is constant.

(viii) Cost of capital in excess of growth rate: - It is presumed that the firm's cost of capital is greater than the growth rate.


Related Discussions:- Describes the gordons dividend model

State the example to calculate the present value, State the Example to calc...

State the Example to calculate the present value 2, 00,000 $ is the amount which you require after 20 years for your retirement. How much must you invest now at 5% per annum co

Business have a positive accounting profit, Can a business have a positive ...

Can a business have a positive accounting profit and a negative economic profit? Please explain.

Capital budgeting case study, RWE Enterprises is a small manufacturer in Ad...

RWE Enterprises is a small manufacturer in Adelaide South Australia, feed suppliments for cattle. New production line NPV, Payback period and discounted payback period

WACC, Keys Printing plans to issue a $1,000 par value, 10-year noncallable ...

Keys Printing plans to issue a $1,000 par value, 10-year noncallable bond with a 5.00% coupon, paid semiannually. It should sell at par. The company''s marginal tax rate is 40.00%

Policy conflicts in debt and monetary management, Policy Conflicts in Debt ...

Policy Conflicts in Debt and Monetary Management: Co-ordination of operations is important so as to avoid differences in the policies of cash and debt management of the governm

How cash budget and capital budget relate to pro forma, Explain how the cas...

Explain how the cash budget and the capital budget relate to pro forma financial statements. The cash budget depicts the projected flow of cash in and out of the firm for fixed

Board of directors, Q. Board of Directors Board of Directors - Individu...

Q. Board of Directors Board of Directors - Individuals responsible for overseeing the affairs of an entity including the election of its officers. Board of a CORPORATION which

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

Treasury auction process, All treasury securities are issued on the b...

All treasury securities are issued on the basis of auction. The auction process is computerized and hence qualified broker-dealers can access it electronically. T

Sovereign debt , Sovereign debt is a debt instrument guaranteed by th...

Sovereign debt is a debt instrument guaranteed by the government. The other names for sovereign debts are sovereign bonds or government bonds. They are issued in

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd