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when you subtract growth rate from cost of equity (discount rate) you are basically adjusting the cost of equity that means as company grows it may become more stable and less risky as compared to declining earnings and investor demand for lower required rate of return(cost of equity ).
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Excellent explanation of concept and easy to grasp for a beginner great job !!!
Why do we discount at the end using the required rate instead of the rate of that period of growth?
This was great, thanks a ton!
Why do we subtracted g from ke in denominator?
Thank i really appreciate
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Thanks a lot brother … May Almighty Allah shower his countless blessings, Aameen 🤲🏼
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Why growth rate is subtracted from cost of equity in Gordon growth model
when you subtract growth rate from cost of equity (discount rate) you are basically adjusting the cost of equity that means as company grows it may become more stable and less risky as compared to declining earnings and investor demand for lower required rate of return(cost of equity ).
Thanku sir
If are not having dividend for first two years. How we can solve this question
free cash flow will replace dividend