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What would be a good response to the below in regards to an advantage and a disadvantage of residual income model and the discounted cash
What would be a good response to the below in regards to an advantage and a disadvantage
of residual income model and the discounted cash flow model?
One advantage of the residual income model is that it uses readily available accounting data
from a company's financial statements. On the other hand, one of the disadvantages is that this
model can't be used for companies that pay dividends. One of the advantages of the
discounted cash flow model is that it includes very indepth and detailed calculations and a vast
variety of assumptions about a business. Meanwhile, one of the disadvantages is that it can be
very complex and is sensitive to small changes.
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