Question

Assuming you are a business owner with different shareholders. How may zero growth stock valuation and constant stock valuation affect your business operations?

Answer 1

The ways that zero growth stock valuation can affect business operations is that:

• When zero-growth model states that the dividend is at the same rate, it shows that one has no measure of growth in terms of dividends. This therefore  shows that stock price is equal to the annual dividends and divided also by the needed  rate of return.

What ways does constant stock valuation affect business operations?

The Constant  stock valuation  is known to be a kind of share evaluation as it states that the dividends paid by a firm will consistently increase at a constant growth rate.

This will help one to know especially investors on how to set or know the fair price that one needs to pay for a stock on daily basis today by due to future dividend payments.

The overall statement is that  stock value affect one's business operations as  the company's stock price is one that shows an investor perception of their capability to get profit and also if they can grow their profits in terms of future times.

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