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Neither of the two key valuation models dominates the other in all cases, and both are theoretically equivalent. Instead, we must choose the model that
Neither of the two key valuation models dominates the other in all cases, and both are
theoretically equivalent. Instead, we must choose the model that performs best under
practical circumstances. In this case, we will discuss the advantages and disadvantages
of the two models.
What are some of the advantages and disadvantages of the residual income model and
the discounted cash flow model? Describe at least one advantage and one disadvantage
of each model.
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