<Dd> r = D 1 P 0 + g . (\ displaystyle r = (\ frac (D_ (1)) (P_ (0))) + g .) </Dd> <P> Which allows the formula of the Gordon Growth Model: </P> <P> Stock Value (P) = D / k--G </P> <P> Where "D" stands for expected dividend per share one year from the present time, "G" stands for rate of growth of dividends and "k" represents the required return rate for the equity investor . </P>

The gordon dividend discount model has a number of problems which include