Question: Explain how we can use the Gordon Growth Models to Value the Fair Price of a Stock (Explain both the Constant Growth and the non-Constant

Explain how we can use the Gordon Growth Models to Value the Fair Price of a Stock (Explain both the Constant Growth and the non-Constant Growth Models):

a) How is the DCF-Discounted Cash Flow method used in these models?

b) How we decide which is the Discount Rate for each model?

c) When do we use Present Values of Amounts and when do we use Present Values of Annuities / Perpetuities?

d) How can we make investment decisions using these models? What is the decision Rule?

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The Gordon Growth Model also known as the GordonShapiro Model or the Dividend Discount Model DDM is a valuation method used to determine the fair price of a stock It is based on the principle that the ... View full answer

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