Question

Examples to calculate value of share in gordon model

Answer 1

The model assumes a company exists forever and pays dividends that increase at a constant rate. To estimate the value of a stock, the model takes the infinite series of dividends per share and discounts them back into the present using the required rate of return. The result is a simple formula, which is based on mathematical properties of an infinite series of numbers growing at a constant rate.

Answer 2

Explanation:

is a stock valuation method that calculates a stock’s intrinsic value, regardless of current market conditions. Investors can then compare companies against other industries using this simplified model. Major contributors to this model are Myron J. Gordon, Robert F. Weise, and John Burr Williams.