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Provide the issues or disadvantages of a dividend discount model (Gordon Growth Model) for equity and...

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Finance

Provide the issues or disadvantages of a dividend discount model(Gordon Growth Model) for equity and give a detailed quantitativeexample and interpretation. Use the following to calculate,D0=$2.20, g=5%, Beta 1.2, Rf=3%

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The disadvantages of the DDM is Since the Gordon growth model assumes that the growth rate is constant this model can only be applied to the mature and stable companies This model cannot be used in the case of young companies and start up companies which exhibit a multiple growth pattern There are two many    See Answer
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Provide the issues or disadvantages of a dividend discount model(Gordon Growth Model) for equity and give a detailed quantitativeexample and interpretation. Use the following to calculate,D0=$2.20, g=5%, Beta 1.2, Rf=3%

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