I never really understood what do they mean when they say that…
DDM is for minority perspective, and
FCF is for control perspective…
thnx a lot for helping guys…really confussed…
When you’re a minority owner you have no control over the firm. Just the expected return on you’re investment is just how much dividend they’re willing to pay you. That’s why gordon growth
For a control you technically have the control of the company (pay all earnings into dividend, what projects to undertake), so you use the FCF method, you see it more like a busy unit inside you’re company (that why you CAN’T use equity accounting if you have control [>50% shares]).
Basically miniority ownership is like buying the company’s stocks. Control is accquiring the company.
hey thnx man…i get it now… 