How sensitive is model value to changes in estimates of r-g

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Reference no: EM131349132

The Gordon growth model value for X company was estimated as €22.18 based on:

• a current dividend of €0.68,

• an expected dividend growth rate of 6 percent, and

• a required return on equity of 9.25 percent.

What if the estimates of r and g can each vary by 25 basis points? How sensitive is the model value to changes in the estimates of r and g ??

Reference no: EM131349132

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