This page contains the Gordon Growth Model formula to calculate the required rate of return. The required rate of return is calculated based on the Gordon growth model, also known as the dividend discount model (DDM), which is used to determine the intrinsic value of a stock based on a future series of dividends. Substitute the required inputs in the Rate of return formula and do the operations to get the result. Here g in the Dividend discount model formula indicates the growth.
The Required rate of return or the dividend discount model (DDM) is used to value stocks based on the net present value of the future dividends. The Gordon Growth Model formula equates this intrinsic value of a stock to the present value of a stock's future dividends.