Dividend valuation model
You'll learn how the dividend valuation model determines share value based on expected future dividends—a core technique for business valuations in FM and AFM.
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In this lesson
- 0:00 Dividend valuation model introduction
- 0:03 Cost of equity formula explained
- 0:16 Formula components and definitions
- 0:39 Application in business valuations
About this lesson
The model uses the formula Ke = (D0 × (1 + g) / P0) + g, where Ke is cost of equity, D0 is the current dividend, P0 is the ex-dividend share price, and g is the constant growth rate. This approach is essential for understanding how markets price equity and appears regularly in valuation questions across ACCA papers. Master this model to confidently tackle share pricing and cost of equity calculations in your exams.
Duration: 1m
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