The valuation approach is the methodology used to determine the fair market value of a business. “The value method equals the present value of projected future payoffs from the value of the money and the risk inherent of expected payoffs” (Whalen, Baginski, and Bradshaw, 2018, P.726). One example of this is the future benefits that reflect the net present value with the equity interest or asset. The valuation method within the cash flow is identified by the share prices are overpriced (P.727). An example of this is the market value of a car looking from the blue book price to what the vehicle is worth. The equity of the valuation is the type of asset of the company. It evaluates how much the asset is worth and will be worth for the company. Valuation determines the amount of the cash flow as well as the equity for shareholders.

Dividend valuation model is one of the formulas that is useful in finding the overall value of the stock. Some of the advantages and disadvantages of this model exists and the company used as an example is Apple Inc. company that have been confirmed to be having both advantages and disadvantages of this model. As such, one benefit of the model is that it is a conservative model of valuation because it does not require growth assumptions to create value. Apple Incl. uses this formula to predict about the future of the dividends by considering the current happenings. Another advantage of the model is that is easy to comprehend and as such, Apple company uses it for valuation of any stock that have dividends.

The disadvantage of the model is that it is over simplistic and this makes its applications to be limited to companies that have consistent growth in dividend. Like many companies, Apple have flaws in the rate at which the dividend’s rate grow. The other disadvantage of the model is that it only work for the stock companies that pays dividends and the problem is that not all companies are good at paying dividends. Lastly, the model is not good in including the non-dividend factors.