When asked to determine the MPS using the dividend growth model for your case you're using the Gordon model. So my question is, is the dividend growth model the same as the Gordon model? Kindly help
If I only have the current trading share price which is $67 and the last 5 years dividends growing by 7% on average annually. Last year divedend was $5.9. How can I calculate the real market price? I calculated based on the above that cost of equity is 16.23%. Should I use the 18% cost of equity that you mentioned and the 10% growth rate on dividends? I did that and found 81$ but I am not sure why shall I use these parameters in my example.
Company TYK forecasts that it will begin paying dividends seven years from now, at which point dividends are $1 per share. Please what is D0 or D1 when? I’m trying to calculate the price of shares
There is a point that i don't understand. g is defined as dividend growth rate. However in some case, i see that they put g = (1-payout ratio)*ROE. This latter (1-payout ratio)*ROE = sustainable growth rate, not dividend growth rate. For me g must be equal to Payout ratio*ROE. At this point I don't understand very well. Can you explain ? Thanks
How do the growth rate of the dividend payments and the required rate of return affect stock value? Analyze your answer with examples. Pls help me for answer
but the share holders are not earning 18% on their investment of R78. They are only earning 8.46% in Year 1 (6.6/78). Can any1 help me in solving this?
It is a mathematical computation. Since we are not calculating dividends into perpetuity, we just reduce the discounting rate (the required rate of return) by the growth rate. To put it simply, the lower the denominator in the formula, the higher the market price. As such, the denominator is reduced by the growth rate.
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thank you now im comfortable with these formulas
When asked to determine the MPS using the dividend growth model for your case you're using the Gordon model. So my question is, is the dividend growth model the same as the Gordon model? Kindly help
Sorry, sir, I am confused about d1, why can't we just take it as 6 in the second example? I have made several exercisers, where we don’t add (1+0.1)
Greetings ! Is Gordon's model suitable for a company which has borrowed a large sum of money? Thus the presence of debt on Balance Sheet
Thank you
Hi is that minimum return of 18% is divident yield ?
It is the required rate of return
How can we calculate the growth rate ?
Great stuff
If I only have the current trading share price which is $67 and the last 5 years dividends growing by 7% on average annually. Last year divedend was $5.9. How can I calculate the real market price? I calculated based on the above that cost of equity is 16.23%. Should I use the 18% cost of equity that you mentioned and the 10% growth rate on dividends? I did that and found 81$ but I am not sure why shall I use these parameters in my example.
Company TYK forecasts that it will begin paying dividends seven years from now, at which point dividends are $1 per share.
Please what is D0 or D1 when? I’m trying to calculate the price of shares
Thank you so much
There is a point that i don't understand. g is defined as dividend growth rate. However in some case, i see that they put g = (1-payout ratio)*ROE. This latter (1-payout ratio)*ROE = sustainable growth rate, not dividend growth rate. For me g must be equal to Payout ratio*ROE. At this point I don't understand very well. Can you explain ? Thanks
Thanks you
What are some of the issues involved in implementing the dividend growth model
Check out the advantages and disadvantages towards the end of the lesson
How do the growth rate of the dividend payments and the required rate of return affect stock value? Analyze your answer with examples.
Pls help me for answer
but the share holders are not earning 18% on their investment of R78. They are only earning 8.46% in Year 1 (6.6/78).
Can any1 help me in solving this?
Why we are deducting growth from cost of equity
It is a mathematical computation. Since we are not calculating dividends into perpetuity, we just reduce the discounting rate (the required rate of return) by the growth rate. To put it simply, the lower the denominator in the formula, the higher the market price. As such, the denominator is reduced by the growth rate.
@@Counttuts ohh thanks
u have simply stated the formula , where is the explanation ?