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`VoS = D_1 /( "k" - "g" )`

Enter a value for all fields

The **Gordon Growth Model** calculator computes the present value of a stock based on the dividend per share in year one (D_{1}), the required growth rate (k), and the growth rates in dividends (g).

**INSTRUCTIONS:** Choose the preferred units and enter the following:

- (
**D**) Dividend per share in year one._{1} - (
**k**) Investors required annual rate of return. - (
**g**) Perpetual annual growth rate in dividends.

**Gordon Growth Model (VoS):** The calculator returns the present value of the stock in U.S. dollars. However, this can be automatically converted to other currencies via the pull-down menu.

The Gordon growth model is used to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate. Given a dividend per share that is payable in one year, and the assumption the dividend grows at a constant rate in perpetuity, the model solves for the present value of the infinite series of future dividends.

The formula for the Gordon Growth Model is:

VoS = D_{1}/(k - g)

where:

- VoS = Value of Stock based Gordon Growth Model
- D
_{1}= Dividend per share in year one - k = Investor required annual rate of return
- g = Perpetual annual growth rate in dividends

Source: Gordon Growth Model Definition | Investopedia http://www.investopedia.com/terms/g/gordongrowthmodel.asp#ixzz4AWojyp37