Dividend Growth Model

The Dividend Growth Model (Gordon-Shapiro):

${Present\ Value}=\sum _{t=1}^{\infty }{\frac {D_{t}}{(1+C_{equity})^{t}}}$

The $C_{equity}={\frac {D_{1}}{P_{0}}}+g$

Where

• $P_{0}$ is the present value
• $D_{1}$ is the dividend
• $g$ is the growth rate