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    The document contains examples of applying the Graham-Dodd, Walter's, and Gordon's models to value shares. The Graham-Dodd model values a share at $20.53 using EPS of $10, DPS of $4, and a growth rate of 2.8%. Walter's model values shares between $19.5-$102 depending on the dividend payout ratio, EPS, dividend payout, required return, and cost of equity. Gordon's model values shares between $7.50-$30 depending on the dividend payout ratio, EPS, retention ratio, cost of equity, and required return.

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    The document contains examples of applying the Graham-Dodd, Walter's, and Gordon's models to value shares. The Graham-Dodd model values a share at $20.53 using EPS of $10, DPS of $4, and a growth rate of 2.8%. Walter's model values shares between $19.5-$102 depending on the dividend payout ratio, EPS, dividend payout, required return, and cost of equity. Gordon's model values shares between $7.50-$30 depending on the dividend payout ratio, EPS, retention ratio, cost of equity, and required return.

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    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
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    6 views3 pages

    Others 1680514194708

    Uploaded by

    Techboy Rahul
    The document contains examples of applying the Graham-Dodd, Walter's, and Gordon's models to value shares. The Graham-Dodd model values a share at $20.53 using EPS of $10, DPS of $4, and a growth rate of 2.8%. Walter's model values shares between $19.5-$102 depending on the dividend payout ratio, EPS, dividend payout, required return, and cost of equity. Gordon's model values shares between $7.50-$30 depending on the dividend payout ratio, EPS, retention ratio, cost of equity, and required return.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
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    of 3

    GRAHAM-DODD MODEL

    EPS 10
    DPS 4
    M 2.8

    VALUE OF A SHARE = P = M(D + E/3) 20.53


    WALTER'S MODEL
    Example 3 Dividend Payout Ratio 30%
    EPS 6
    DPS 1.8
    r 20%
    ke 10%

    VALUE OF A SHARE = P = D/Ke + [r/Ke(E – D)]/Ke 102

    Example 4 Dividend Payout Ratio 30%


    EPS 6
    DPS 1.8
    r 10%
    ke 20%

    VALUE OF A SHARE = P = D/Ke + [r/Ke(E – D)]/Ke 19.5

    Example 5 Dividend Payout Ratio 30%


    EPS 6
    DPS 1.8
    r 20%
    ke 20%

    VALUE OF A SHARE = P = D/Ke + [r/Ke(E – D)]/Ke 30


    GORDON'S MODEL
    Example 6 Dividend Payout Ratio 50%
    EPS 1.5
    b 50%
    ke 10%
    r 15%

    VALUE OF A SHARE = P = [E(1 – b)]/[Ke – b.r] 30

    Example 7 Dividend Payout Ratio 50%


    EPS 1.5
    b 50%
    ke 15%
    r 10%

    VALUE OF A SHARE = P = [E(1 – b)]/[Ke – b.r] 7.50

    Example 8 Dividend Payout Ratio 50%


    EPS 1.5
    b 50%
    ke 15%
    r 15%

    VALUE OF A SHARE = P = [E(1 – b)]/[Ke – b.r] 10.00

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