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Constant Growth Rate Model

July 19, 2012
  • Vj = D1 / (k – g)
  • Vj = value of the stock J
  • D1 = Current Dividend times (1 + g) = D0 * (1 + g)
  • k = The required rate of return
  • g = The constant growth rate of dividends
  • g = ROE * (1 – dividend payout ratio)

From → Asset Valuation

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