How to Calculate Constant Growth Stock
Value a stock using the Gordon Growth Model with constant dividend growth.
The Formula
P = D1 / (r - g)The constant growth stock formula uses the mathematical relationship: P = D1 / (r - g). Each variable in the formula represents a measurable quantity that affects the final result.
Step-by-Step Method
- 1Identify all input values needed for the constant growth stock calculation.
- 2Substitute your known values into the formula: P = D1 / (r - g).
- 3Perform the arithmetic operations in the correct order (PEMDAS/BODMAS).
- 4Check that your result has the correct units and is within a reasonable range.
- 5Verify using the interactive Constant Growth Stock Calculator to confirm your answer.
Related Topics
Gordon Growth Modelstock valuationdividend discount
Use the Interactive Calculator
Skip the manual math — get instant results with our free Constant Growth Stock calculator.