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Dividend Discount Model values stock as present value of all future dividends: P = D₁/(r-g) where D₁ is next dividend, r is return, g is growth.

Trin-for-trin guide

  1. 1Input next dividend, growth rate, required return
  2. 2Calculate intrinsic value
  3. 3Compare to market price for investment decision

Løste eksempler

Input
Dividend $2, growth 5%, required return 10%
Resultat
Intrinsic value = $2 / (0.10-0.05) = $40
Highly sensitive to assumptions

Almindelige fejl at undgå

  • Using inappropriate growth rate
  • Assuming growth perpetual (unrealistic)
  • Neglecting terminal value

Ofte stillede spørgsmål

Does DDM work for non-dividend stocks?

Not directly; requires expected future dividends or assumes buyback equivalent.

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