Calculating Cost Of Equity Using Gordon Model

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Calculate Cost of Equity Using Gordon Model

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Use this free Cost of Equity Calculator to determine a company’s cost of equity using the Gordon Growth Model. Simply enter the latest annual dividend, expected growth rate, and current stock price to get an instant result with detailed explanations.

Gordon Model Cost of Equity Calculator

Inputs

Enter the values below to calculate the cost of equity:

Current annual dividend per share (in dollars or euros)

Constant annual growth rate of dividends (as a percentage)

Current market price per share (in dollars or euros)

Results

Cost of Equity (Re):$0.00

Calculated using Gordon Growth Model: Re = (D1 / P0) + g

Expected Dividend (D1):$0.00

D1 = D0 × (1 + g)

Dividend Yield (D1 / P0):0.00%

Current market dividend yield

Growth Rate (g):0.00%

Expected annual dividend growth

Dividend Growth Forecast

Chart: Projected annual dividends (D0 to D5)
Component Value Symbol
Current Annual Dividend $0.00 D0
Expected Growth Rate 0.00% g
Current Stock Price $0.00 P0
Expected Dividend (Year 1) $0.00 D1
Dividend Yield 0.00% D1 / P0
Cost of Equity 0.00% Re

How the Gordon Growth Model Works

The Gordon Growth Model (GGM), also known as the Dividend Discount Model with constant growth, is a widely used method for calculating the cost of equity. It assumes that dividends grow at a constant rate indefinitely. The formula is:

R

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