The difference between a constant growth model and a non constant growth model resides in the consideration of the firm's risk. Non-constant growth model directly considers the risk as reflected in beta in determining the required return. The constant growth model does not look at risk. It uses the market price as a reflection of the expected risk-return preference of investors in the market.Continue Reading
The constant growth dividend model (also known as the Gordon growth model) and non-constant growth dividend model (commonly known as Capital Asset Pricing) techniques for finding the return are theoretically the same, though in the common practice estimates from the two models do not always agree. These two methods produce different estimates because they require estimates as inputs of other quantities, such as the expected dividend growth rate and the firm's beta.
Another difference is that when the constant growth model is used to find the cost of common stock equity, it can be easily adjusted to for the flotation costs to find the cost of common stock, while the non-constant growth model provides a complex adjustment method. With the constant growth model, a firm overlooks the risk that the company may not be profitable and will have to cut its dividends that may later on reduce the stock price. The non-constant growth model sets up a firm to expect that the market may become weak and would drag the stock price with it.Learn more about Business Resources
The average workers compensation settlement on a knee injury is $359,149 for a serious injury and $114,299 for a median injury as of 2011, according to Maryland law firm Miller and Zoix. Only 8 percent of injury verdicts were over $1,000,000.Full Answer >
A principal partner in a business is the partner that represents the firm. Usually, a principal partner's decisions are representative of the all the partner's interests, and often speaks on behalf on the entire firm.Full Answer >
You can sell limited edition prints by contacting an art gallery, signing up with an online art brokerage firm or selling the prints directly to buyers through an auction site such as eBay or a classifieds sites such as Craigslist, as of 2015. In all cases, make sure the prints are in clean condition and that you independently research each price before committing to a sale.Full Answer >
The security of public paper shredding varies depending on the firm chosen to carry out the services. The Paper Shredding Services Review rates the top 10 public paper shredders between fair and excellent in document security.Full Answer >