H-Model write, please, someone

LorrinCFA

Can someone please write out the formula?

chaojimali

[D0*(1+gL)/r-gL] + [D0*H*(gS-gL)]/(r-gL)

where H is the inverse of how many years the decline is spread (1/t)

brainsX

Um, H is the years spread / 2. Is that what you meant?

OmarAdnan

H = t/2

sorry for the confusion :\

xilinx_altera

One more clarification :-) H represents 1/2 the HIGH GROWTH period. Seems obvious but I've asked dumber questions in my day. Hope that helps at least one person...

WarrenB1

Yes, H = half the period of high growth.

yospaghetti

well it's obviously not the long term perpetual growth period.... t divided by infinity doesn't work too well hahah

llxx

The trap is the first term dividend is d * long g. The second term dividend is just d and the formula.

5566

yeah, that's a key point...
and make sure you know how to rearrange the formula to solve for growth incase everything else is given and just need g

Analyze_This

that would be pretty annoying, MFIN. but yeah, i guess it's fair game for them to ask that. same thing for getting the g from an RI model.