Michael R King COM371 9a Equity valuation using DDM

Prof. Michael R King · Intermediate ·💰 FinTech & AI for Finance Professionals ·5y ago

Key Takeaways

Explains how to value a common share using the Dividend Discount Model and calculates sustainable growth rate

Original Description

Explains how to value a common share using the Dividend Discount Model (DDM), where the price is the discounted present value of dividends using a perpetuity formula. Illustrates the calculation using several examples, showing the sensitivity to the inputs. Shows how to back out the expected return and how to calculate the sustainable growth rate. Values the stock of Royal Bank of Canada using DDM.
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