Gordon dividend model
This query is : Resolved
05 October 2011
Gordon Dividend formula is
Po=D1/Ke-g
Where
D1=DPS Next Year
Ke=Cost of Equity
g=Growth
Po=Current market price
I want to Know Why We deduct growth from Ke while calculatinh Market Price???? Should not it be added??????
Po=D1/Ke-g
Where
D1=DPS Next Year
Ke=Cost of Equity
g=Growth
Po=Current market price
I want to Know Why We deduct growth from Ke while calculatinh Market Price???? Should not it be added??????
07 October 2011
simply because you are discounting the future value-growth in today's terms where Ke is greater than g
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