Which statement is correct? Stock repurchases invalidate the dividend discount modelStock repurchases increase the number of shares and make it difficult to forecast dividends per shareStock repurchases do not add value to a business and can be ignored. When there are repurchases, it is simpler to value a business by discounting the free cash flow.

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Business

Karla Farley

8 March, 03:56

Which statement is correct? Stock repurchases invalidate the dividend discount modelStock repurchases increase the number of shares and make it difficult to forecast dividends per shareStock repurchases do not add value to a business and can be ignored. When there are repurchases, it is simpler to value a business by discounting the free cash flow.

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Raisin · Answer 1

When there are repurchases, it is simpler to value a business by discounting the free cash flow.

Explanation:

Reason stock repurchase decline the quantity of the offers held by open and profit can be gauge much after repurchase of offers.

It influence the estimation of organization and it ought not be overlooked.

Stock repurchase doesn't negate DDM model in light of the fact that there are many creator express that DDM can be utilized for the valuation in for esteeming firm which repurchase or get it's offers.

Indeed it is anything but difficult to utilize free income for esteeming firm offers by utilizing free money flow approach of calculation of share cost or value.