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.Know More
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
Forecasting demand is important because it enables a firm to accurately and efficiently allocate resources to a level of production that meets anticipated demand. Incorrect forecasts, either too high or too low, are both economically inefficient and unprofitable. Demand forecasting is performed at both the micro and macro levels.Full Answer >
A control measure is any measure taken to eliminate or reduce the risk of injury or bodily harm by way of signage, physical restrictions, implemented policy or equipment repair. Control measures are commonly used in dangerous work environments, such as factories, to ensure safety.Full Answer >
Business risk is the chance that the overhead a business faces to stay in operation is larger than the money the owner has to spend on it. The owner takes upon himself the risk that cash flow from the business may be inadequate to meet the expenses the business incurs.Full Answer >
Hepatitis B poses the greatest occupational risk of any blood-borne pathogen from which health care workers are at risk, according to the Centers for Disease Control and Prevention. The chance of becoming infected with hepatitis B from a needle or sharps injury is between 6 and 30 percent.Full Answer >