Chartered Financial Analyst Level 2
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17 An analyst gathers the following information about a company:
- Most recent dividend growth rate: 8%
- Expected future dividend growth rate: –3%
- Nominal GDP growth rate: 3.5%
- Required return on equity: 7.5%
Is the Gordon growth model an appropriate valuation model to use for valuing this company?
17 An analyst gathers the following information about a company:
- Most recent dividend growth rate: 8%
- Expected future dividend growth rate: –3%
- Nominal GDP growth rate: 3.5%
- Required return on equity: 7.5%
Is the Gordon growth model an appropriate valuation model to use for valuing this company?
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