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[1] [2] The constant-growth form of the DDM is sometimes referred to as the Gordon growth model (GGM), after Myron J. Gordon of the Massachusetts Institute of Technology, the University of Rochester, and the University of Toronto, who published it along with Eli Shapiro in 1956 and made reference to it in 1959.
Growth and yield modelling is a branch of financial management. This method of modelling is also known as the Gordon constant growth model . In this method the cost of equity share capital is found by determining the sum of yield percentage and growth percentage.
Myron Jules Gordon, FRSC (October 15, 1920 – July 5, 2010) was an American economist. He was Professor Emeritus of Finance at the Rotman School of Management , University of Toronto . In 1956, Gordon along with Eli Shapiro, published a method for valuing a stock or business, now known as the Gordon growth model .
The Gordon model or Gordon's growth model [11] is the best known of a class of discounted dividend models. It assumes that dividends will increase at a constant growth rate (less than the discount rate) forever. The valuation is given by the formula:
SPM is an alternative to the Gordon growth model (GGM) [2] and can be applied to business or stock valuation if the business is assumed to have constant earnings and/or dividend growth. The variables are: is the value of the stock or business
Earnings growth rate is a key value that is needed when the Discounted cash flow model, or the Gordon's model is used for ... If the growth rate is constant for ...
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The Modigliani–Miller theorem states that dividend policy does not influence the value of the firm. [4] The theory, more generally, is framed in the context of capital structure, and states that — in the absence of taxes, bankruptcy costs, agency costs, and asymmetric information, and in an efficient market — the enterprise value of a firm is unaffected by how that firm is financed: i.e ...