Dividends on the common stock of Stable Inc. are expected to grow at a constant rate forever. If you are told Stable's most recent dividend paid, its dividend growth rate, and a discount rate, you can only calculate the price now, from the past and into the future.

Question

Quizplus · Accepted Answer

The Gordon Growth Model (a version of the Dividend Discount Model) allows you to calculate the present value of a stock with dividends growing at a constant rate, using the most recent dividend, growth rate, and discount rate.

Dividends on the Common Stock of Stable Inc