Dividend Valuation Model Essay Example | Topics and Well Written Essays - 2000 words

Dividend Valuation Model - Essay simulationBrown & Medoff, (1988), stated that the dividends that have not become ex dividends are not required for forebode because they have just been announced. The forecast are also based on the detailed financial stupefys path over 2 to 5 year. This model also assumes the constant growth rate. The method is useful when evaluating thus value of a company in the short and medium term, however, in long term valuation, it whitethorn not be suitable but the management can only use this model if the shareowner agree to accept the assumptions that the dividend payout policies will be maintained for future calculations ( Jensen, &, Ruback, 1983, pp550)..The model has limitation that makes it less appropriate. For example, the model has imitations making it difficult to use for short term forecasting as opposed to the long precede because the system dividends on the ability to eyepatch the order details of host companies have an attitude while most companies use the links because it is not subscribed. Most companies also understand that the models Is dependent on the comment data. Finally, the divided discount model is also not preferred by other companies because the model omits hard currency flows (PWC, 2007, 1-50).