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CFA Level 1
Equity Investments

Intrinsic Value Calculation Using Gordon Growth Model

Easy Equity Valuation Techniques Dividend Discount Models

John is considering investing in a stock that is expected to pay a dividend of $3 per share next year. He believes the dividends will grow at a constant rate of 5% per year indefinitely. If John requires a return of 10% on his investment, what is the intrinsic value of the stock based on the Gordon Growth Model (Dividend Discount Model)?

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