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Gordon Growth Model Formula

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Current Stock Price is the present purchase price of security. Check FAQs

P c = \frac{D}{RR - g}

P_c - Current Stock Price?D - Dividend Per Share?RR - Required Rate of Return?g - Constant Growth Rate of Dividend?

Gordon Growth Model Example

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Here is how the Gordon Growth Model equation looks like with Values.

Here is how the Gordon Growth Model equation looks like with Units.

Here is how the Gordon Growth Model equation looks like.

440 = \frac{22}{0.08 - 0.03}

440 = \frac{22}{0.08 - 0.03}

440 = \frac{22}{0.08 - 0.03}

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Gordon Growth Model Solution

Follow our step by step solution on how to calculate Gordon Growth Model?

FIRST Step Consider the formula

P c = \frac{D}{RR - g}

Next Step Substitute values of Variables

∴

P c = \frac{22}{0.08 - 0.03}

Next Step Prepare to Evaluate

∴

P c = \frac{22}{0.08 - 0.03}

LAST Step Evaluate

∴

P c = 440

Gordon Growth Model Formula Elements

Variables

Current Stock Price

Current Stock Price is the present purchase price of security.

Symbol: P_c

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Current Stock Price

Dividend Per Share

Dividend Per Share is a financial metric that represents the amount of cash a company is willing to distribute to its shareholders in the form of dividends.

Symbol: D

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Dividend Per Share

Required Rate of Return

Required Rate of Return is the minimum return an investor expects for taking on the risk of investing in a particular asset, such as stocks or bonds.

Symbol: RR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Required Rate of Return

Constant Growth Rate of Dividend

Constant Growth Rate of Dividend refers to the assumption that dividends paid by a company will grow at a stable, constant rate indefinitely.

Symbol: g

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Constant Growth Rate of Dividend

Other formulas in Forex Management category

Go Cumulative Distribution One

D 1 = \frac{\ln (\frac{P c}{K}) + (R f + \frac{{v us}^{2}}{2}) \cdot t s}{v us \cdot \sqrt{t s}}

Go Cumulative Distribution Two

D 2 = D 1 - v us \cdot \sqrt{t s}

Go Black-Scholes-Merton Option Pricing Model for Call Option

C = P c \cdot P normal \cdot (D 1) - (K \cdot \exp (- R f \cdot t s)) \cdot P normal \cdot (D 2)

Go Black-Scholes-Merton Option Pricing Model for Put Option

P = K \cdot \exp (- R f \cdot t s) \cdot (- D 2) - P c \cdot (- D 1)

How to Evaluate Gordon Growth Model?

Gordon Growth Model evaluator uses Current Stock Price = (Dividend Per Share)/(Required Rate of Return-Constant Growth Rate of Dividend) to evaluate the Current Stock Price, The Gordon Growth Model formula is defined as a method used to value a stock by assuming that dividends will grow at a constant rate indefinitely. Current Stock Price is denoted by P_c symbol.

How to evaluate Gordon Growth Model using this online evaluator? To use this online evaluator for Gordon Growth Model, enter Dividend Per Share (D), Required Rate of Return (RR) & Constant Growth Rate of Dividend (g) and hit the calculate button.

FAQs on Gordon Growth Model

What is the formula to find Gordon Growth Model?

The formula of Gordon Growth Model is expressed as Current Stock Price = (Dividend Per Share)/(Required Rate of Return-Constant Growth Rate of Dividend). Here is an example- 440 = (22)/(0.08-0.03).

How to calculate Gordon Growth Model?

With Dividend Per Share (D), Required Rate of Return (RR) & Constant Growth Rate of Dividend (g) we can find Gordon Growth Model using the formula - Current Stock Price = (Dividend Per Share)/(Required Rate of Return-Constant Growth Rate of Dividend).

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Gordon Growth Model Formula

Gordon Growth Model Example

Gordon Growth Model Solution

Gordon Growth Model Formula Elements

Other formulas in Forex Management category

How to Evaluate Gordon Growth Model?

FAQs on Gordon Growth Model

Variable Name