Re: How To Prove The Validity Of Dividend Discount H Model
- To: mathgroup at smc.vnet.net
- Subject: [mg50772] Re: How To Prove The Validity Of Dividend Discount H Model
- From: cskoh001 at yahoo.com.sg (kcs)
- Date: Sun, 19 Sep 2004 21:39:34 -0400 (EDT)
- References: <9ouhfg$19q$1@smc.vnet.net>
- Sender: owner-wri-mathgroup at wolfram.com
Hmm....this reply comes 3 years late. But i believe you can find your solution here. Please refer to Fuller and Hsia [`A Simplified Common Stock Valuation Model? Financial Analysts? Journal Sept-Oct 1984 p49-56] On Thu, 27 Sep 2001 06:37:36 +0000 (UTC), @Paul wrote: >Hi, >I am studying for the financial analysis course. I have no problems with the >Gordon Growth Model & The Two- Stage Dividend Discount Model. > >But, I have difficulty proving the equation form of the H model: > >Value per share = DPS0(1 + g2) / (r - g2) > + DPS0 * H (g1 - g2) / (r - g2) > >This model assumes that the initial high growth rate (g1) will decline >linearly to the stable growth rate (g2). The high growth period is assumed >to last for 2H years. Thereafter, the dividends grow at a constant rate g2 >forever. DPS0 is the dividend at time 0. > >Any help from anyone is much appreciated. Thanks. > >Julie