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1. The Residual Earnings model yields different value/share results when total $ earnings and total dividend...

1. The Residual Earnings model yields different value/share results when total $ earnings and total dividend payments for the firm are used contrasted to eps and dps figures:

a. True

b. False

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Answer #1

b) False

In the residual earning model, the intrinsic value of a share of common stock is the sum of book value per share and the present value of expected future per-share residual income.

Thus the results if EPS/DPS or Earning/Dividends are considered should yield given the overall outstanding shares are considered as a common denominating factor.

THis is because the outstanding shares will remain the same for the overall earning and the dividend payments

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