ddmst - Beta of the stock = 0.95 Riskfree rate = 7.00% (in...

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Gordon Growth Model Page GORDON GROWTH MODEL This model is designed to value the equity in a stable firm paying dividends, which are roughly equal to Free Cashflows to Equity. Assumptions in the model: 1. The firm is in steady state and will grow at a stable rate forever. 2. The firm pays out what it can afford to in dividends, i.e., Dividends = FCFE. User defined inputs The user has to define the following inputs to the model: 1. Current Earnings per share and Payout ratio (Dividends/Earnings) 2. Cost of Equity or Inputs to the CAPM (Beta, Riskfree rate, Risk Premium) 3. Expected Growth Rate in Earnings and dividends forever. Please enter inputs to the model: Current Earnings per share = $4.33 (in currency) Current Payout Ratio = 63.00% (in percent) Are you directly entering the cost of equity? (Yes or No) No If yes, enter cost of equity = (in percent) If no, enter the inputs for the CAPM
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Unformatted text preview: Beta of the stock = 0.95 Riskfree rate = 7.00% (in percent) Risk Premium= 5.50% (in percent) Expected Growth Rate = 6% (in percent) The expected growth rate for a stable firm cannot be significantly higher than the nominal growth rate in the economy in which the firm operates. It can be lower. Warnings: This is the output from the Gordon Growth Model Firm Details: from inputs on prior page Current Dividends per share = $2.73 Cost of Equity = 12.23% Expected Growth rate = 6.00% Gordon Growth Model Value = 46.4509879518 Growth rate Value 8.00% $69.73 7.00% $55.86 6.00% $46.45 5.00% $39.64 4.00% $34.49 3.00% $30.46 2.00% $27.21 1.00% $24.55 0.00% $22.31 8.00 % 7.00 % 6.00 % 5.00 % 4.00 % 3.00 % 2.00 % 1.00 % 0.00 % $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 Value vs. Expected Growth Expected Growth Rate Value of Stock...
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