(b) Why might the usefulness of EPS (earning per share) be limited? Give reasons to support your answer.

Q: Is it because: a. The capital gain will be different because the dividend did not change. or…

A: Capital gain can be calculated s follows: Capital gain=(Sale price - Cost price)Cost price* 100

Q: 1. When does the concept of "undervalued" and "overvalued" arise? How can you increase or decrease…

A: When you invest in stock market than you need to think properly and with financial security and…

Q: What's the difference between the capital asset pricing model and modified capital assset pricing…

A: Capital Asset Pricing Model CAPM describes the relationship between systematic risk and expected…

Q: Would the NPVs change if the cost of capitalchanged?

A: The NPV (Net Present Value) is entirely based on the value of the weighted average cost of capital…

Q: In general it argued that the lower of cost of market rule is supported most closely by which of the…

A: The lower of cost or market rule is related to valuing the inventory, the company should value the…

Q: What does it mean for markets to be efficient? What are the differences in the degree of efficiency,…

A: The markets are considered to be efficient if the information related to various aspects that create…

Q: Is the dividend discount methodology an appropriate method of valuation for Airtasker? Why/why not?…

A: The process of determining the current worth of a business using objective measures and evaluating…

Q: Which of the following methods does not consider the investment’s profitability? a. ARR b. Payback…

A:

Q: For what three main reasons is profit maximization inconsistent with wealth maximization?

A: Profit maximization is the traditional approach which only focuses on increasing the profit of the…

Q: What is capital rationing, what conditions lead toit, and how should it be dealt with?

A: Capital budgeting is a process in which capital projects are assessed in terms of their viability…

Q: Why do you think Dividend Irrelevance theory is unrealistic?

A: The dividend irrelevance theory was proposed by Merton Miller and Franco Modigliani. According to…

Q: What is the market model? How is it different from the SML forthe CAPM?

A: The market model is utilized to show how forces of supply and demand powers cooperate to decide…

Q: What is earning per share? Explain its significance.

A: Earnings per share:  Earnings per share represent the amount of income earned per share of…

Q: Should firms focus on book value or market value capital structures? How would the calculatedWACC be…

A: In all actuality, the organization will have the option to utilize the capital structure dependent…

Q: , How is the ability-to-pay principle (c) different from the benefit principle? Briefly discuss the…

A: Introduction:-  Ability to pay—A tax fairness idea that asserts that persons with various levels of…

Q: discuss the respective theorists, their arguments against and for dividend policies

A: Firm issued various securities to arrange the fund for the business and pay return on it. Dividend…

Q: What is the crossover rate, and how does its value relative to the cost of capital determinewhether…

A: Crossover rate is a rate where net present values of two mutually exclusive projects are equal to…

Q: The cost of capital is a hurdle rate. Is this statement true? Why or why not?

A: The question is based on the concept of minimum required rate for any project . Hurdle rate is the…

Q: b) Explain the reasons why do investors prefer high or low pay out ratio?

A: The high payout ratio is when a large portion of earnings is distributed to shareholders and a low…

Q: what are the sssumptions about market efficiency?

A: The theory that states that all the information available in the capital market is reflected in the…

Q: Explain the reasons why do investors prefer high or low pay out ratio? ​​

A: Dividend refers to that portion of the profits which is distributed among the shareholders as a…

Q: unlevered cost of equity under Modigliani-Miller Model?

A: Formula:

Q: Why is "Projecting Growth Beyond What the Capital Being Valued Will Support" considered a common…

A: Income Approach There are two different model which was incurred in the income approach.  The…

Q: did hedging reduce volatility of the realized price?Answer Yes or No and explain

A: Hedging can be referred as a strategy that is used by the investors to reduce the risk associated…

Q: What is the crossover rate, and how does it interact with the costof capital to determine whether or…

A: The rate at which the net present value (NPV) of 2 ventures is equivalent is the crossover rate…

Q: It is assumed that the Cost of equity and rate of return are both constant under Walter's Model of…

A: Dividend is the amount of money which is given to the shareholders of the company from the earnings…

Q: What are some reasons that net PP&E might grow proportionally tosales, and what are some reasons…

A: Property, plant & equipment are company's long term assets important for the company's…

Q: Which type of market efficiency is not true? Why

A: An efficient market is one where the market price is unbiased and reflects all known information. If…

Q: What is market Value added? What is economic value added? What is the difference between what each…

A: Market value added is the amount of wealth that the company is able to create for its stakeholders.…

Q: n efficient market hypothesis and what are anomalies in the efficient market hypothesis?

A: Efficient market hypothesis is hypothesis explain the pricing in the market of equity and market…

Q: ly based on tax rate structure may be less than optimal.

A: Equity: This is one of the tax system evaluationcriteria pertaining to the concept of equal or…

Q: Does the signaling theory lead to the same conclusions regarding the optimal capital structure asthe…

A: The concept of signaling theory comes from the asymmetries of knowledge between management and…

Q: on, what is the main problem with the dividend valuation models as compared to the free cash flow…

A: Dividend growth model is very good method but still has many problems.

Q: Is there a better choice between the book value per share or the price-earnings multiple approaches?

A: Book value per share is valuation model which is purely based on the book value of assets and…

Q: Why do maximizing EPS and maximizing value not necessarily lead to the same conclusion about the…

A: Earning per share or EPS is referred as the net profit of the corporation, which are divided through…

Q: end pricing model and why is it i

A: Step 1 The dividend discount policy is a quantitative method used to predict a company's stock price…

Q: Is the accounting rate of return (ARR) the same thing as the return on investment (ROI)?

A: Yes, Accounting rate of return (ARR) the same thing as the Return on investment (ROI). The…

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