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Basic Question 3 of 5

If a company is in its growth phase and has large capital demand to fund its growth, ______ should NOT be used.

I. Dividend discount model.
II. Free cash flow model.
III. Residual income model.
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User Contributed Comments 1

User Comment
danlan2 If a company is in its growth, its free cash flow is often negative.
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Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh

Craig Baugh

Learning Outcome Statements

compare dividends, free cash flow, and residual income as inputs to discounted cash flow models and identify investment situations for which each measure is suitable;

CFA® 2025 Level II Curriculum, Volume 3, Module 21.