The formula used for valuation of equity shares with assumption of normal growth in dividend is
Under Myron Gordon's Constant Growth Dividend Discount Model, the intrinsic value of an equity share (P0) assuming a constant normal growth rate (g) in dividends is given by…
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The formula used for valuation of equity shares with assumption of normal growth in dividend is
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Correct answer B
Under Myron Gordon's Constant Growth Dividend Discount Model, the intrinsic value of an equity share (P0) assuming a constant normal growth rate (g) in dividends is given by D1 / (Ke - g), where D1 = D0(1 + g) is next year's expected dividend and Ke is the cost of equity.
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UGC NET Management