What are assumptions of walters dividend model, Financial Management

Assignment Help:

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


Related Discussions:- What are assumptions of walters dividend model

Features of a budget, FEATURES OF A BUDGET a.         It is prepared f...

FEATURES OF A BUDGET a.         It is prepared for a specific period. b.         It is expressed in quantity or money or both. c.         It is a statement describing ob

Case Study: Trade Finance and Risk, Can Engineering Tech effectively protec...

Can Engineering Tech effectively protect its interests and assure payment?

Manage Budget and Financial Report, Complete the financial reporting for ea...

Complete the financial reporting for each period and develop recommendations using the templates provided. Procedure 1. Read the case study. 2. Complete the financial reports

Case study - credit-linked notes, Case Study - Credit-Linked Notes Cred...

Case Study - Credit-Linked Notes Credit linked notes are assets issued by financial institutions which have exposure to the credit risk of a reference Issuer . These notes pay

Explain and compare forward vs. backward internalization, Explain and compa...

Explain and compare forward vs. backward internalization. Forward internalization takes place when MNCs with intangible assets make FDI in order to use the assets on a larger sca

Term money, Short-term funds having a maturity of 15 days and over ar...

Short-term funds having a maturity of 15 days and over are categorized as term money. Banks access this term money route to bring greater stability in their short

Manage an assignment, Manage a project or clearly defined piece of work fro...

Manage a project or clearly defined piece of work from beginning to end. This may include setting up a budgetary system.

Putable bonds, Putable bonds can be redeemed prior to maturity at the initi...

Putable bonds can be redeemed prior to maturity at the initiative of the bondholder. These bonds are more advantageous to the investors as they get an opportunity to re

Brigham, how do legal consideration affect a firms credit policy

how do legal consideration affect a firms credit policy

What are financial markets, What are financial markets? Why do they exist? ...

What are financial markets? Why do they exist? Ans: Financial markets are in which financial securities are bought and sold.  They be present primarily to bring deficit economi

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