Module 7

Question 1

Constant Dividend growth model equation?

Answer 1

P = D(1+g)/(r-g)

Question 2

4 steps of the non-constant growth model?

Answer 2

1. Calculate Present value of dividends over years of non constant growth
2. Value of share at of this period using new growth rate
3. Discount share value back to present day (PV)
4. Add together PV of all dividends to get share value 1+3