Type the Excel formula for the Gordon price of a share that just paid a $1.80 dividend, growing 4 % a year, when the market requires 9 %.
Type the Excel formula for the Gordon price of a share that just paid a $1.80 dividend, growing 4 % a year, when the market requires 9 %.
Answer
=1.80*(1+0.04)/(0.09-0.04)
37.44. The just-paid 1.80 is D₀; × 1.04 makes it D₁ = 1.872 before dividing by the 5 % spread.
Bigel, Introduction to Financial Analysis (CC BY 4.0) §14.5–14.8 — constant-growth DDM, annual form only (the §14.8 quarterly variant is deliberately not shipped); OpenStax Principles of Finance §11.2 — reference only; original company and figures