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Up0
A few things for anyone looking for some karma. 🙂
1.) How to calculate and interpret the implied growth rate of dividends using the Gordon growth model.
I’m racking my brain through the readings here. Since V = (D1)/(r-g), then would not this merely be as simple as g = ((-D1)/V) + r
?Or am I missing something?
2.) I’m lost on terminal value. Can I get the 2 or 3 sentence rundown here? I get enough to be dangerous, so assume I know nothing.
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Up4
Havent really dived into the material yet but what i remember from level 1 is that the growth rate is simply (1- dividend ratio) x ROE.
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Up4
Hi, in the test you will have 3 options as answers. Instead of going through all the algebra to get g plug each g (each answer) and choose the one that is equal to V
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Up2
Haven’t started studying yet. Based on algebra, it does look right. for #2 not sure what you are asking, what exactly are you lost on?
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Up1
On terminal value, extend the final payment by the short term growth rate and then divide by (r-g). So if D0 grows by 5% for 3 years to find terminal value take D3 * 1.05, then divide by r-g. And in this case g=long term growth rate. Once you get that number add it to D3 and discount back to PV.
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Up1
If you want, I can share Arif Irfanullah’s video of that reading with you. His videos really helped me clear several conceptual doubts.
Email me at salilmathur1690@gmail.com if you are interested.
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