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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BENTO CO (JUN 15)
Quoting a line from this question’s answer to part c):
“Although the future potential of the company represented by the dividend valuation model, rather than the current value of the assets, is probably a better estimate of the potential of the company, the price of $60 million seems excessive.”
Sir does this statement suggest that current value of the assets is a better estimate of future potential of a business than dividend valuation model? Or is it the other way round. Am getting confused because of the way the sentence is framed.
It is the other way round 🙂
The dividend valuation model gives a better estimate that the asset values (because it is a better estimate of the potential of the company).