The Constant-Growth-Rate Discounted Dividend Model, , says that: P0 = D1 / (k – g)
A. rearrange the terms to solve for:
i. g; and
ii. D1.
As an example, to solve for k, we would do the following:
1. Multiply both sides by (k – g) to get: P0 (k – g) = D1
2. Divide both sides by P0 by to get: (k – g) = D1 / P0
3. Add g to both sides: k = D1 / P0 + g