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.
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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