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Question:

Among valuation models, the difficulty of estimating a required rate of return is most likely to be a disadvantage of using a(n):

A
Gordon growth model.

Explaination

One of the disadvantages of present value models such as the Gordon growth model is that the required rate of return on equity must be estimated. Neither an enterprise value multiplier model nor an asset valuation model requires an explicit estimate of the required rate of return.

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