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Dividend Valuation Method

Forums › CIMA Forums › Dividend Valuation Method

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by AvatarP2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • February 14, 2019 at 12:26 pm #505108
    Avatargoswamigora82
    Participant
    • Topics: 3
    • Replies: 1
    • ☆

    Dear Sir, I am having trouble in understanding Dividend Valuation method related to the query below. Appreciate if you can help be sort out the logic.

    When we value company using dividend valuation method or value of shares, some time the formula used is D1(1+g) / (Ke-g) and some time D1/(Ke-g)

    This create some difference in the answer i get and the answer mentioned in the book.

    February 17, 2019 at 11:00 am #505489
    AvatarP2-D2
    Keymaster
    • Topics: 4
    • Replies: 7235
    • ☆☆☆☆☆

    Hi,

    It isn’t D1(1+g), you should be using Do(1+g) as this is then the same as D1, the dividend in one year’s time.

    Thanks

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