The correct answer is B. Myron J. Gordon.
The dividend capitalization
23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z"/> Subscribe on YouTubeThe model assumes that a stock’s price is equal to the present value of its future dividends, discounted at a rate that reflects the risk of the stock. The model can be written as follows:
P = D1/(r – g)
where:
P = the price of the stock
D1 = the dividend per share expected in the next year
r = the discount rate
g = the expected growth rate of dividends
The dividend capitalization model is a simple and straightforward method of valuation. However, it has some limitations. One limitation is that it assumes that dividends will grow at a constant rate. This may not be realistic, as dividends can fluctuate over time. Another limitation is that the model does not take into account other factors that can affect a stock’s price, such as changes in earnings or interest rates.
Despite its limitations, the dividend capitalization model can be a useful tool for estimating the value of a stock. It is important to remember, however, that the model should only be used as one part of a comprehensive valuation analysis.