GORDON GROWTH MODEL
Model for computing the intrinsic value of a stock, according to a future series of dividends growing at a constant rate. Granted a dividend per share payable within a year, it presumes the dividend grows at a constant rate in perpetuity. Calculated as:
Stock Value = (P) = D / k - G
Where:
D = Expected annual dividend per share
k = Required or discount rate of return for equity investor
G = Dividend growth rate (assumed to be constant)
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