# Grinold-Kroner model

E(Re) ≈ Income Return + Nominal Earnings Growth + Repricing Return

Income Return = D/P – ΔS

Nominal Earnings Growth = i + g

Repricing Return = ΔPE

*You may need to know how the formula breaks down in case they ask for partial return.*

E(Re) ≈D/P – ΔS + i + g + ΔPE

E(Re) = the expected rate of return

D/P = the expected dividend yield

ΔS = the expected percentage change in number of shares outstanding

i = the expected inflation rate

g = the expected real total earnings growth rate

ΔPE = the per period change in the P/E multiple

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