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CFA Level 2
Equity Investments

Value of Stock using Gordon Growth Model

Very Easy Equity Valuation Applications Discounted Dividend Valuation

A financial analyst is evaluating a company that has consistently paid dividends over the past several years. The analyst expects the company to continue growing its dividends at a constant rate of 5% per year. If the most recent dividend paid was $2.00 and the required rate of return for an investor in this stock is 10%, what is the value of the stock using the Gordon Growth Model?

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