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Theoretical foundations

Abstract

Shareholders, investors, and lenders have an obvious interest in the value of a firm. In an efficient market, firm value is defined as the present value of payoffs which the firm is expected to deliver to its shareholders in the future, discounted at the appropriate risk adjusted rate of return (Kothari, 2001, p. 108-109).10 It is evident that dividends are payoffs to shareholders, but it is also well recognized that dividend discount approaches have practical problems. Finance and accounting literature, therefore, offer a number of alternative valuation methods, which are theoretically equivalent to dividend discounting.

Keywords

Intangible Asset Free Cash Flow Earning Growth Residual Income Operate Cash Flow 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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