shareValueGGMconstantGrowth: Calculates DDM value of share under the assumption that...

In stockAnalyst: Equity Valuation using Methods of Fundamental Analysis

Calculates DDM value of share under the assumption that Dividends are to grow at constant rate.

Description

The simplest pattern that can be assumed in forecasting future dividends is that dividends will grow at a constant rate. So, DividendN1 is equal to dividendNt multiplied with (1 + g). Here, DividendN1 expected dividend to be paid after one year and dividendNt is current dividend (Jerald E. Pinto, 2020).

Usage

shareValueGGMconstantGrowth(dividend, r, g, divN)

Arguments

dividend	A number.
r	A number.
g	A number.
divN	A number.

Details

According to information provided by Jerald E. Pinto (2020), the method shareValueDDMconstantGrowth is developed to compute DDM value of share under the assumption that Dividends are to grow at constant rate for the values passed to its four arguments.Here, dividend is current dividend, g is rate of constant growth, r is the required rate of return on the stock ,and divN lets you make choice between D0 or D1 (that is either using current dividend (D0) or Dividend in one year (D1) as dividend in the first argument of shareValueDDMconstantGrowth).

Value

Input values to four arguments dividend, r and g and divN.

Author(s)

MaheshP Kumar, [e-mail]

References

Pinto, J. E. (2020). Equity Asset Valuation (4th ed.). Wiley Professional Development (P&T). https://bookshelf.vitalsource.com/books/9781119628194

Examples

shareValueGGMconstantGrowth(dividend=1.1024,r=0.101,g=0.06,divN=1)
shareValueGGMconstantGrowth(dividend=1.04,r=0.101,g=0.06,divN=0)

stockAnalyst documentation built on Sept. 13, 2022, 5:07 p.m.