Session Ready
Exercise

Equity Value per Dividend Discount Model

In this exercise, you will use the dividend discount model (DDM) to value the subject firm's equity. Suppose the company pays dividends of $1 per share (div) annually into perpetuity and that the dividends grow each year into perpetuity at a rate of 3.0% (pgr). Assuming the cost of equity is 11.55% (ke), what is the value of the firm's equity per share?

Instructions
100 XP
  • Calculate the equity value using the DDM.