标题: Help wanted, implied growth rate from GGM [打印本页] 作者: burning0spear 时间: 2013-8-9 09:30 标题: Help wanted, implied growth rate from GGM
Hi guys
I just cant get my head around the working out for calculating an implied growth rate when given the P0, D0 and r.
Example, stock is $28.5, recently paid div of $2.15 and required rate is 10.5%, the answer is 2.75% but no idea how the reading got to that!
Any explanation appreciated. Thanks作者: iteracom 时间: 2013-8-9 09:31
the formula is V = Do (1+g) / (r-g)
Plug in the values and we have:
28.5 = 2.15(1+g) / 0.105 - g
and find g
2.9925 - 28.5g = 2.15 + 2.15g
30.65g = 0.8425
therefore g = 0.02748 = 2.75%作者: strikethree 时间: 2013-8-9 09:31
why are you studying now?…bit early for L2 2014….作者: Viceroy 时间: 2013-8-9 09:31
Just look out for what is given - D0 vs. D1作者: SpyAli 时间: 2013-8-9 09:31
Thank you, algebra never my strong point.作者: tikfed 时间: 2013-8-9 09:31
I doubt such elementary BS would show up on the exam. Unless they want the passing rate to be 80%.
