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Dividend Discount Model Excel Template

The document presents a Dividend Discount Model (DDM) template for educational purposes, detailing various models including Multi-Period Discount and Gordon Growth models. It includes assumptions such as net income growth, payout ratios, and cost of equity, along with calculations for present value of dividends and implied share prices. The content is copyrighted by CFI Education Inc. and is strictly confidential.

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Evans Makori
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268 views2 pages

Dividend Discount Model Excel Template

The document presents a Dividend Discount Model (DDM) template for educational purposes, detailing various models including Multi-Period Discount and Gordon Growth models. It includes assumptions such as net income growth, payout ratios, and cost of equity, along with calculations for present value of dividends and implied share prices. The content is copyrighted by CFI Education Inc. and is strictly confidential.

Uploaded by

Evans Makori
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Dividend Discount Model Template Strictly Confidential

Table of Contents

Dividend Discount Model

© 2015 to 2023 CFI Education Inc.


This Excel model is for educational purposes only and should not be used for any other reason. All content is Copyright material of CFI Education Inc.
All rights reserved. The contents of this publication, including but not limited to all written material, content layout, images, formulas, and code, are protected
under international copyright and trademark laws. No part of this publication may be modified, manipulated, reproduced, distributed, or transmitted in any
form by any means, including photocopying, recording, or other electronic or mechanical methods, without prior written permission of the publisher,
except in the case of certain noncommercial uses permitted by copyright law.

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Dividend Discount Model

Multi-Period Discount Model - Net Income Growth and Payout Ratio Assumptions
(USD $ millions except for share price) Year 1 Year 2 Year 3 Year 4 Perpetuity
Net Income 500.00 525.00 551.25 578.81 3,708.02 Net Income Growth (1) 5.0%
Dividends 25.00 26.25 27.56 28.94 Net Income Growth (2) 2.5%
PV of dividends 21.10 18.69 16.56 14.68 Payout Ratio 5.0%
Terminal Value 185.40 Risk Free Rate 2.5%
PV of perpetuity 94.02 Beta 2.00
Market Risk Premium 8.0%
Total 165.06 Cost of Equity 18.5%
Implied Share Price $165.06 Shares Outstanding 1,000,000

Multi-Period Discount Model - Dividend Growth Assumptions


(USD $ dollars) Year 1 Year 2 Year 3 Year 4 Perpetuity
Dividends 25.00 25.50 26.01 26.53 Dividend growth rate (1) 2.0%
PV of dividends 21.10 18.16 15.63 13.45 Dividend growth rate (2) 0.5%
Terminal Value 148.13 Risk Free Rate 2.5%
PV of terminal Value 75.12 Beta 2.00
Market Risk Premium 8.0%
Implied Share Price $143.46 Cost of Equity 18.5%

Gordon Growth Discount Model Assumptions


(USD $ dollars) Year 1 Year 2 Year 3 Year 4 Perpetuity
Dividends 25.00 154.55 Dividend growth rate 2.0%
PV of dividends Risk Free Rate 2.5%
Beta 2.00
Market Risk Premium 8.0%
Implied Share Price $154.55 Cost of Equity 18.5%

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