From the Gordon formula for stock valuation (a.k.a. the PV formula for growing perpetuity) P =...

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From the Gordon formula for stock valuation (a.k.a. the PV formula for growing perpetuity) P = Do* (1+g) / (k-g), where P is the stock price, Do is the current dividend payment, g is the dividend growth rate, and k is the discount rate, please derive a formula for the discount rate k in terms of P, Do, and g. TGT currently pays a dividend of $4.32 per share. Under the assumption that the company's stock price is fairly valued, and its annual dividend growth rate is 2%, what is the implied discount rate according to your formula from the previous question? Please use TGT's share price on Sept 2 for this calculation. From the Gordon formula for stock valuation (a.k.a. the PV formula for growing perpetuity) P = Do* (1+g) / (k-g), where P is the stock price, Do is the current dividend payment, g is the dividend growth rate, and k is the discount rate, please derive a formula for the discount rate k in terms of P, Do, and g. TGT currently pays a dividend of $4.32 per share. Under the assumption that the company's stock price is fairly valued, and its annual dividend growth rate is 2%, what is the implied discount rate according to your formula from the previous question? Please use TGT's share price on Sept 2 for this calculation.

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To derive the formula for the discount rate k in terms of P Do and g we start w... View the full answer