BusinessFinance

Gordon Growth Formula: What Is the Gordon Growth Model?

The Gordon growth model values a share as the present value of dividends growing at a constant rate: P₀ = D₁/(r − g), with r greater than g.

Question

What is the Gordon Growth Model?

This question has been answered.

Explore the full answer and supporting references to better understand this question.

Verla BasicBest value

$19.99/month

  • Everything in Study Pass
  • Assignments with writing output
  • AI detection and humanizer
  • Basic quotas across every tool
Study Pass

$0.99/month

  • Entire question library
  • Knowledge guides and sources
  • Detailed answers and explanations
  • No AI tools or quotas

Evidence boundary

This answers the independent Gordon Growth Model short question on P. V. Viswanath’s Pace University course page. The question provides no company data and asks for a definition, so no observed share price or investment recommendation is inferred. The formula assumes perpetual constant dividend growth with r > g.