Abstract
In recent issues of the Journal of Applied Corporate Finance Friedl and Schwetzler (2011) and Bradley and Jarrell (2008, 2011) voiced opposing views on the relation between the retention rate/plowback rate and the growth rate in the context of the constant growth valuation model when considering inflation. We find that the discussed models represent two different versions of the constant growth model with different underlying assumptions regarding the implied capital maintenance. Reviewing the models under a consistent set of assumptions we resolve the dispute and illustrate that both models result in identical growth rates and consequently in identical value estimates.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
