Dividend Growth Model Dividends are expected to grow at a constant percent per period. ·P0=D1/(1+R)+D2(1+R)2+D3(1+R)3+. ·P0=D,(1+g)/(1+R)+Do(1+g)2(1+R)2+ Do(1+g)3/(1+R)3+.. With a little algebra,this reduces to: D(1+g) Po R-g R-9 1010 Dividend Growth Model n Dividends are expected to grow at a constant percent per period. § P0 = D1 /(1+R) + D2 /(1+R)2 + D3 /(1+R)3 + … § P0 = D0 (1+g)/(1+R) + D0 (1+g)2/(1+R)2 + D0 (1+g)3/(1+R)3 + … n With a little algebra, this reduces to: R - g D R - g D (1 g) P 0 1 0   