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DDMST
DDMST
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Gordon Growth Model
Expected Growth Rate = 6% (in percent) The expected growth rate for a stable firm
cannot be significantly higher than the nominal
growth rate in the economy in which the firm
operates. It can be lower.
Warnings:
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Gordon Growth Model
Value of Stock
5.00% $39.64 $50.00
4.00% $34.49
3.00% $30.46 $40.00
2.00% $27.21 $30.00
1.00% $24.55
0.00% $22.31 $20.00
$10.00
$0.00
8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00
% % % % % % % % %
Expected Growth Rate
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Gordon Growth Model
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Gordon Growth Model
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Gordon Growth Model
0 1.00 0.00
% %
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