Gordon Growth Model
Same as DDM: P = D₁ / (k − g). Single-stage constant-growth model.
Result
Intrinsic value
$49.92
D₁ = $2.50; price = D₁ / (k−g).
- D₀$2.4
- D₁ = D₀(1+g)$2.4960
- k9.00%
- g4.00%
- k − g5.000%
- Intrinsic value$49.9200
Step-by-step
- D₁ = D₀ × (1 + g) = 2.4 × 1.04 = $2.4960.
- P = D₁ / (k − g) = 2.4960 / 0.0500 = $49.92.
How to use this calculator
- Enter most recent dividend D₀.
- Required return k (CAPM).
- Long-term growth rate g.
About this calculator
Gordon Growth Model is the same single-stage DDM, formulated by Myron Gordon (1959). Take current dividend, grow it 1 year forward, discount the perpetuity at k. Useful for back-of-envelope intrinsic-value checks of mature dividend stocks. Compare to current market price: if intrinsic > market → undervalued (buy candidate).
Frequently asked
Yes — Gordon Growth Model is the constant-growth variant of DDM. Names interchangeable.
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