Supernormal Growth Dividend Valuation Model - This model assumes that returns in the form of dividends grow at an above normal rate over time period and grow at a normal rate thereafter. This approach states that the value of the company's ordinary equity share equals the present value of the expected dividends during the normal growth period plus the present value of the sale price at the end of the above normal growth period. Formula: P_o Sigma^m_T = 1 D_(1 + g_s)^t (1 + k_s)t Where: Gs = supernormal growth rate m = period of supernormal growth Illustrative Problem 4.6 Calculation of the Value of Ordinary Equity share -Supernormal Growth Dividend Model EBC expects dividends to grow at a rate of 12% a year for the next 6 years and 8% annually thereafter. The company's current dividend per share is P3.00. The investors required rate of return is 15%. What is the value of the ordinary equity share of EBC