Discounting dividends and stock assessment. Calculation of the price of the action at a permanent growth rate of dividends. Formula M. Gordon Model Gordon is characterized by the formula

Methods for assessing assets are several, one of them - the method of discounted cash streams (Discounted Cash Flow - DCF), which many specialists in Russia prefer. Assessing the asset, two difficult tasks must be solved: to form cash flow forecast and evaluate the value of the company outside the forecasting opportunities. Solving the first task, we are based on our plans and relatively accurate estimates. ambient We plan, and then discount cash flows: and receipts - revenue, and outflows - current expenses, investments, interest payments; - And this is a separate topic. Our article is devoted to the issue - how to assess the value of the asset in the post-obnous period using the Gordon model.

What is this article:

Features of assessment of the asset in the postpricultural period

The post-obnous period mathematically is an infinite beam, as directed to an indefinite future, whereas the forecast period is the final segment of the nearest perspective.

For an assessment of an asset in the postpricular period, the term is justified - terminal value, as it is assumed that the project reached the level of constant sustainable growth (height can be zero), otherwise it is necessary to build a forecast period until the moment of entering sustainable indicators.

When we estimate the cost of the asset outside the forecast period, we have a number of restrictions, problems:

• we do not have plans for the future;
• we do not understand the market, political situation, macroeconomic parameters;
• we do not have an understanding of the level of technological development and consumer preferences.

The essence is one - we do not know anything about the "ray of time" and cannot be predicted with satisfying us the degree of accuracy. Financial analysts face such calculations, where the price of an asset is 50-60% consists of a post-obnous assessment, this was due to a short forecast period or high long-term growth rates in the period. For the post-obnous period, it is true that, taking into account the discount, the weight of the cash flow estimate of each next period over time is striving for zero, the longer period of time we predicted and appreciated, the less contribution to total The cost of the asset will make the terminal value. It is necessary to comply with the balance of the level of definiteness and weight of the post-rough estimate.

The value of the asset, which grows with a constant tempo, can be assessed by the following formula:

where CF. - cash flow last year before stabilization of the growth rate;

g is a long-term or eternal rate of money flow;

Gordon model: Formula

After applying a number of non-good arithmetic transformations, using the limit theory and the formula of the amount of geometric progression, we transform the formula to the form:

This formula is called the model of Gordon. So it was called in honor of Mairon Jay Gordon, who first suggested her in a joint chapier research work, published back in 1956 (Capital Equipment Analysis: The Required Rate Of Profit Myron J. Gordon, Eli Shapiro Management Science. 1956. Vol. 3 . No. 1. P. 102-110.). The historical name of the model of Gordon is a model of permanent growth dividends.

Initially, the formula was applied to the evaluation financial instruments, stocks, but considering an investment project as an asset, this formula can also be used (see also about analysis and assessment of investment projects ). It is important for the use of a Gordon model when calculating the cost of a business or project that the following restrictions were performed:

1. Cash flows will increase unlimited time with constant speed.
2. cash flows and their growth rates should be coordinated with what we estimate:
   1. for shares - dividends (see also about payment of dividend );
   2. for investor investment - the flow remaining at the disposal of the investor;
   3. for the company - cash flow companies;
   4. for project - cash flows only project.
3. The discount rate should also be coordinated with the estimated streams:
   1. For shares and investor investment - the cost of attracting equity;
   2. For a company and project - the cost of attracting aggregate capital.
4. The rate of money flow (G) cannot be higher than the discounting coefficient (K), in financial practice, even tougher assertion is made - the rate of money flow is always less than the percentage rate, which is composed of the real interest rate and the rate of inflation. This is an explanation - the risk-free interest rate is determined by the growth rate of the economy as a whole, and no project can last a long time to grow faster than the economy, that is, to sustainably maintain a competitive advantage.

If the formula is substituted with CF T +1 \u003d CF * (1 + g), we will get another popular expression for the Gordon model formula:

For an extreme case, when the growth rate is zero (G \u003d 0), the model of Gordon will look like this:

How to use a model of Gordon

You can use the Gordon model in different versions.

General

Gordon's formula to apply as the only way to evaluate is very controversial, it is difficult to achieve such parameters in which from the very beginning of the implementation the project will generate cash flows with the same growth rate. Therefore, the project evaluation process usually looks like this:

• first, we estimate our forecasting capabilities and select the forecast period (5,10,15 years);
• apply the traditional DCF to the forecast period and we obtain an estimate at the forecast period;
• we arrive at the inner consensus that next year we go out to a permanent level of growth;
• we estimate the level of growth in the post-obnous period;
• we estimate the terminal value by applying the Gordon formula;
• we fold the amounts of estimates in the forecast and postpricular period and as a result we obtain a total estimate of the project.

Example

Consider the project of acquiring a new production line: the cost of the line is 2 million rubles, the value of commissioning works is 0.5 million rubles, the cash flow in the first year of the line is 0.3 million, in the second - 0.4 million, in the third - 0.6 million, fourth - 0.7 million, fifth - 0.9 million, then the cash flow stabilizes and grows with a pace of 3%. The discount rate is equal to the cost of attracting funds to the project - 15%.

Table 1. Assessment of cash flows in the forecast period

As you can see the project does not pay off for 5 years of the forecast period.

Now we appreciate the project in the postpricultural period.

• the first year of the postproconnic period will receive a cash flow in the amount of 0.9 million + 3% \u003d 0.927 million.

According to Gordon's formula, we calculate the cost for the last year of the forecast period.

• for the fifth year, the cost will be: 0.927 / (10% - 3%) \u003d 7.725 million rubles.

• multiply the resulting value for the discount rate for the fifth year: 7,725 * 0.5 \u003d 3.84 million rubles.

The total cost of the project is equal to the sum of the cost of the forecast and postprognosis:

• the total cost of the project: p \u003d -0.69 + 3.84 \u003d 3.15 million rubles.

The formula for zero growth is applicable as a method for estimating real estate objects, for example, we know the rental income, which will most likely not change, and know the amount of current costs, which are also inelastic in time, and those that are elastic (expenses on utilities) Compensated by tenants separately, then the cost of the real estate object will be calculated by the formula:

where k is a capitalization rate.

Example

Suppose there is 1000 sq. M. m. Square, which is surrendered at a rate of 200 rubles per year, a specific consumption of 1 square meters. m. Square - 100 rubles. per year, the capitalization rate is 12% per annum.

Rental flow: 1000 * 200 \u003d 200 thousand rubles.

Flow for maintenance of the object - 1000 * 100 \u003d 100 thousand rubles.

Accordingly, the cost of the object at the capitalization rate is 12% \u003d (200 - 100) / 12% \u003d 833.4 thousand rubles.

Very often in business planning, forming a moderately pessimistic scenario (according to the methodology World Bank) In the post-obnous period, zero growth and the terminal cost is estimated by the Gordon formula for zero growth.

What to take into account when using the Gordon formula to estimate the value of the company

It should be remembered that the Gordon formula is a private type of discounted cash flow models (DCF) for constant growth, and not an independent model. Use the same prerequisites for the model as for calculations on DCF.

When evaluating projects, the fact is often determined that to maintain any level of money flow growth, it is necessary to reinvest the sufficient level of funds in development. The reinvestation rate is calculated based on the profitability of capital participating in the calculation, for example, if capital profitability is 5%, then the refinancing rate for our example will be: 3% / 5% \u003d 60%.

Economic meaning is to ensure the level of project growth in the postproconium period while maintaining capital profitability rates at the level of 5%, we must reinvest 60% of cash flow.

In this case, the Gordon formula is complemented as follows:

where R is the reinvestment rate.

Then, taking into account the reinvestment, our post-revolving cost will be calculated as follows: 0.927 * (1-60%) / (10% -3%) \u003d 3.09 million rubles. Taking into account the lead to the current year - 1.54 million rubles. And the total cost of the project: p \u003d -0.69 + 1.54 \u003d 0.84 million rubles.

If we estimate startups or unique companies that can generate cash flows with a leading growth rate, the Gordon model is not applicable.

Assuming a stable consumption of cash flows, we thus we assume or admit that the company or project is not limited to the market and production facilities, access to capital. In addition, we work in a stable economic situation.

(DDP) describes a model based on the background that the cost of the asset is equal to the discounted amount of the income flow generated by the asset during the period of possession (of the forecast period) and the discounted value of the reversion, which is expected to sell an asset (to return invested capital) after the end of the possession period.

The Gordon model is customary to use to calculate the cost of reversion (terminal value) when using the discounted cash flow method (DDP) to determine the value of unsuccessful assets. In essentially, the formula of the Gordon model is the sum of the infinite discounted income stream. The estimated dependence is as follows:

Harry - the cost of reversion;

Chod - pure operating income;

Y - discount rate;

g. - tempo of changing chod;

m is the initial period number;

Abbreviated designation of the formula of the Gordon model.

For weathered assets, such as real estate objects, the cost of reversion is usually taken to determine by other methods. As one of the calculation options, the direct capitalization method of the first year of the postprognosis is used. Direct capitalization method (PC) is also used as an independent method to determine the value of real estate.

However, in contrast to the DDP method, the PC method describes another model of ownership of real estate. This method suggests that investor investing in real estate, owns this object until the end of his life and at the same time accumulates funds for subsequent acquisition, after complete wear, similar object real estate. That is, thereby consciously reduces the magnitude of the incoming income to the rate of return on capital. The dependence for the PC method is as follows:

(2)

Co - the cost of the property object;

R is the capitalization coefficient;

f. - the rate of return of capital;

index 0 - corresponds to the assessment date;

index 1 - corresponds to the first forecast period.

Since PC and DDP methods reflect several different models of investor behavior, it is not surprising that with certain source data, they can give different results.

To demonstrate the correctness of the described description of the PC method, we transform the dependence (2) to the following form:

(3)

From here:

Thus, we obtained a classic formula for calculating the return on invested capital. For example, for the case of crediting - the ratio of annual payments of interest on the loan to the value of the loan.

Since the rate of return of capital is calculated according to the period of the remaining economic Life The object (credit period of capital), then it follows that the PC method is built on a model that suggests that an investor after investing in an asset will own it to the end of its economic life, which confirms the foregoing.

For the sake of fairness, it should be noted that the DDP method for the unsolved asset in which the Gordon model is used (since the return of capital is not required) can also be considered as a model that implies endless ownership of the asset.

The dependence (3) can be written in the following form:

(4)

If chod \u003d const (g \u003d 0), the first term dependent on (4) corresponds to the formula of the Gordon model in the absence of changing chod. Therefore, substituting in (4) formula (1) and transforming the obtained dependence, we obtain:

(5)

Analysis of dependence (5) indicates an unexpected, at first glance, the result: a wearing asset (having a finite life) generates an infinite flow of income. This can be explained as follows. Since the PC method involves the return of capital by the end of the life of the asset, to acquire a similar asset, then in fact the model described by the PC method involves infinite possession of a periodically updated asset with a limited life lifespan.

If a CONST (G 0), then depending on (5)

YO - Discount rate for the DDP method.

Converting dependence (5) for this case, we get:

Analysis of dependence (6) allows us to conclude that the PC methods and DDP in the general case not only reflect different models of the investor's behavior, but also characterized by different rates of profitability, which is quite logical, since different times Object ownership suggests different risks.

However, the fact that the rate of profitability for the PC method with a growing chode is less than the discount rate for the DDP method, at first glance, it is not entirely logical, since it is usually the longer than the asset life (asset life) is the higher, in the general case, The risk of default. This is explained, for example, that stock market The later the duration of the bond, the higher its profitability. However, in the case of a wearing asset, it seems that the opposite effect is observed due to the fact that over time, as the reimbursement fund accumulates and reduce the cost of the asset, the amount of losses in case of default is reduced. Consequently, the integral value of the risk of default in this case below.

In fact, the idea that when using the PC method, it is necessary to take into account the growth rate of chod not only in the numerator, but it was expressed in the denominator, for example, in. However, the absence of a formula was explicitly led to the fact that in practice, this moment was usually not taken into account in the calculations. Apparently, in connection with this, the results of the calculation of PC and DDP methods with the same source data, in the event of not constant chod and the same profitability rates, differ, sometimes very significant, among themselves. Moreover, the result of the PC method, with a growing chod, has always been lower than the result of the DDP method. Accounting The growth rate of chod in the denominator allows you to reduce this discrepancy in the results of the calculation. But at the same time, the difference in the results may remain, due to the initial differences in models. Dependence (6) can also be recommended for use in the capitalization of the post-proficinal period, in the event of the use of the DDP method.

Conclusion

It has been proven that the model of Gordon, adjusted to the return rate of capital, can be used in determining the value of real estate objects and other wearing assets of the income approach.

It is shown that the discount rate used in the method of discounted cash flows should be used in the direct capitalization method only in the adjusted form.

Literature

1. Business evaluation. Ed. . M.: Finance and Statistics, 2002

2. Analysis and assessment of real estate income. M.: Case, 1995, p. 74-75.

Note.

Originally was posted on http: // www. ***** / DEFAULT. ASPX? Sectionid \u003d 35 & ID \u003d 2974

In conditions of constant growth of dividends with the growth rate G and dividend for the year C, the price of PV shares can be calculated by the Gordon formula: PV \u003d C * (1 + G) / (R - G)

This model assumes that dividends on shares will uncertainly grow with a permanent growth rate. The inclusion in the previous formula of the prediction of dividend growth will make it possible to adjust the result on that part of the cost for shareholders, which is obtained due to reinvestment of profits. The initial assumption is that successful reinvestment will lead in perspective to additional profit growth and, accordingly, to the growth of dividends. Mathematically, this model is based on the Gordon model and has the following form:

P \u003d, (7)

where DO is the last actually paid dividend;

r - Requirement rate required

g - Expected Dividend Growth rate.

The assumption of the constant growth of dividends is typically only for mature companies (there are few of them).

33. Dividend payment procedure

Dividend can be paid quarterly, every six months or annually (frequency is governed by national legislation). The procedure for payment of dividends is adopted in most countries and takes place in several stages (Fig.).

The date of the announcement is the day when the Board of Directors makes a decision (announces) on the payment of dividends, their size, census dates and payments. The date of the census is the day of registration of shareholders entitled to receive announced dividends. The census date is usually appointed 2-4 weeks before the dividend payment day. The ex-dividend date is appointed usually for four business days until the dividend census. The date of payment is a day when sending checks to shareholders is made.

According to Ross. Zak-Wu procedure for payment of dividends is negotiated when released valuable papers and sets out on the back of the action or certificate. The dividend has the right to action acquired no later than 30 days before the officially announced date of its payment. An intermediate dividend is declared by the Board of Directors of the Joint-Stock Company in the calculation of one simple share on the outstanding period. The size of the final dividend coming to one simple share is announced by the General Meeting of Shareholders on the results of the year, taking into account the payment of intermediate dividends. Board of Directors I. general Assembly Shareholders are prohibited to declare and pay dividends in the following cases:

a) on the annual balance of society there are losses (as long as they are covered or will not be reduced authorized capital);

b) Society is insolvent or may be such after the payment of dividends.

The size of the dividend is declared without taxes. The payment of dividends is carried out either by the Society itself, or by the Agent Bank, which act at this point by the state agents to collect taxes from sources and pay dividend shareholders less relevant taxes. Dividend can be paid by check, payment order or postal transfer. By unpaid and non-fulfilled dividends, interest is not accrued. Dividend can be paid to shares, bonds and goods, if provided for by the Charter joint Stock Company.

34. Types of dividend payments and their sources

According to russian legislation Sources of dividends can be: Net profit of the reporting period, retained earnings past periods and special funds created for this purpose (the latter are used to pay dividends by privileged shares In case of insufficiency of profits or loss to society).

In world practice, various variants of dividend payments have been developed.

1. The method of constant percentage of profits. Companies conducted by this technique pay permanent percentage of profits in dividends.

2. Methods of fixed dividend payments, or called compromise policies. A compromise between the stable dollar and percentage amounts of the dividend for the company is the payment of a stable low dollar amount per share plus interest increments in successful years.

3. Dividend payment model for residual principle. The optimal share of dividends is the function of four factors:

1. Preference in investors of dividends compared to capital gains;

2. The investment capabilities of the company;

3. Target capital structure of the company;

4. Accessibility and price of external capital.

Thus, the residual model is the basis for establishing the target value of the dividend payment coefficient in the long term, but should not strictly follow this model from year to year.

4. Methods of payment of dividends shares and crushing shares. Dividends in the form of shares are related to dividend payments in the form of money.

Dividend in the form of shares is additional package Shares issued for shareholders. Such dividends can be announced when the company has problems with cash cash Or when the company wants to revive the implementation of its shares, reducing their market price. Dividend in the form of shares increases the number of shares from shareholders, however, the proportional share of each shareholder in possession of the company remains unchanged.

Crushing shares - a significant amount additional shareswhich thus reduces the nominal value of the action on a proportional basis. The crushing of shares is often explained by the desire to reduce the market price of shares, facilitating their purchase for small depositors.

35. Basic methods for determining dividend payments.

One of the main analytical indicators characterizing the dividend policy is the "dividend output" coefficient, which is the ratio of the dividend on ordinary shares to the profits, affordable ordinary owners. The dividend policy of a constant percentage distribution of profits implies the invaluance of the value of the "dividend output" coefficient, i.e.

In this case, if the enterprise has finished the year with a loss, the dividend may not be paid at all. This technique, in addition, is accompanied by a significant variation of the dividend on ordinary shares, which was noted above, can lead and, as a rule, leads to undesirable fluctuations in the market price of shares. Namely, the decline in the dividend is caused by a decline in shares. This dividend policy is used by some firms, but most of the theorists and practitioners in the field of financial management are not recommended to use it.

Fixed Dividend Payments Method

This policy provides for a regular payment of a dividend per share in a constant amount for a long time, for example, $ 1.3., Whatever change in the course value of shares. If the company is developing successfully and for a number of years earnings per share stably exceeds some level, the size of the dividend can be increased, i.e. there is a certain lag between the two these indicators.

Methods of payment of guaranteed minimum and extra dividends

This technique is the development of the previous one. The company pays regular fixed dividends, however, periodically shareholders are paid extra dividends. The term "Extra" means a premium accrued to regular dividends and having a one-time character, that is, the receipt of it next year is not promised.

The model of Gordon is assessed by the cost of business and other investment objects. The author of the model is economist M. J. Hordon. The essence of the model of Gordon is determined as follows: "The cost of an investment facility at the beginning of the post-the prognosis will be equal to the sum of the current values \u200b\u200bof all the future values \u200b\u200bof the annual cash flows in the post-obnous period." Thus, the annual income is capitalized by forming a business value. And calculated as the difference between the discounting rate and the long-term growth rates.

You can download an example of the work of the Gordon formula in Excel.

Gordon proposed simplified equation:

FV \u003d CF (N + 1) / (DR - T)

To calculate the formula, the following indicators are taken:

• FV - the cost of the object in the postpricular period;
• CF (N + 1) - the flow of revenues to the beginning of the post-rough period;
• DR - discount rate;
• t - long-term income flux growth rates in the residual period.

The feature of the model of Gordon determines the business assessment

The peculiarity is that, under certain conditions, the equation becomes equivalent for a general flow discount equation monetary units. To determine the business of the current value of equity (FV), the expected cash flows must be required for a certain period (CF (N + 1)) to divide the difference between the discount rate (DR) and the growth rate (T). Gordon was necessary to find a solution for calculating dividends, initially its title was the "dividend model". This equation is generalized. The DR - T difference also interrupts the capitalization rate. For example, the result from division 1 / (DR - T) is considered a multiplier (in other words - a coefficient) to income. Accordingly, a very rational model of Gordon is considered compatible with the overall assessment model. The assessment of the business for this model is determined by the production of income on the coefficient. In this way, contacting the method of calculus according to the Gordon formula, you can analyze information about the reserve or business as a whole. Sometimes the term of growth model is found in the literature (it is practically synonymous). Its calculations of forecasts are useful and actively apply both in business management and during its purchase / sale.

Mairon Gordon created a cash flow discount model

The model of Gordon is resorted to ensure difficult to solve the assessment, with tax planning, when evaluating a shares with a uniform increase in the dividend in the stock market. This model effectively apply:

• if there is a sales market volume;
• stable supply of raw materials, material resources for production are traced;
• there is durability of applicable technologies and equipment, guarantee of innovative modernization;
• cash resources are available for the development of the enterprise;
• stable economic situation.

Mairon J. Gordon brought such a model back in 1959. However, for the above-mentioned model, there are alternatives in the overall section of discounted cash flows (DCF). It should be borne in mind that dividends can be paid only according to the results of the economic activity of the enterprise. To do this, it is extremely important to own sufficiently reliable data to predict the expected dividend payments. Dividend's forecast is an extremely difficult task, as there are various economic risks (even if the enterprise has received a high assessment for business stability). Special techniques have been developed that allow you to make approximation of future payments by dividends with the highest possible accuracy. Only with such an assessment of the formula will be rationally applicable. It is in the model of Gordon that assumptions are used about the stable pace of the incidence of dividend payments. Such a model is a variation of dividend discount models, as well as a method for determining prices for shares or evaluate the business as a whole. For example, over-the-counter companies. By the way, this segment is almost impossible to evaluate other methods.

The Gordon model calculates the cash flow forecast

When the period of the predicted period expires, it is assumed that the level of increase in sales and profits will be stable, and the wear indicator is equal to the investment indicator. This cost will be determined with the obligatory indication of the discount rate in the percentage ratio, the rates of increasing monetary turnover In the ratio of interest for the annual time segment. It is important to remember that the value of the value after the expiration of the predicted period by the Gordon formula is determined only at the end of the forecast period. But if we are talking about the first year in the post-obnous period, then these data are reduced separately with the obligatory influence of growth in flow financial means. Use the same discount rate.

The offer is a reality model that we represent in the presentation process.

Without estimating profitability, it is not necessary to understand the benefits of investment or business. There are many techniques that allow investors or businessmen to make the right decision. How to use the Gordon model to assess the profitability of business and investment investment - experts will show the formula and examples of the calculation. On the advantages and disadvantages of the model of Gordon in the calculations of the return on investment, read

1. What does Gordon model mean?

When evaluating investment project Specialists find out the circumstances affecting its attractiveness:

• Could the business project be implemented - the compliance of the legislative, organizational and technological nuances in the proposed project.
• The presence of a sufficient financial component.
• Investor's security from risk to lose funds.
• The project efficiency is the size of the estimated profits from the project.
• Applicable risks are determined.

Let us dwell on one of the above items - the profitability of an investment project or business. In the traditional embodiment, discounted money flows are analyzed.

On this basis, the standard data is calculated:

• Discounted Payback period (PBP).
• Clean value at the moment (NPV).
• Internal type profitability standards (IRR).

Such a set is the base in the process of assessing a business idea. It is he who reflects in, showing his tempting sides. However, the use of only these indicators is not always convenient and correct.

The calculation is based on the NPV indicator, which is inherent in its minuses:

• Making a detailed forecast of the whole period, taking into account alleged investment investments, is often unreasonable. As a result, part of the income is not taken into account. This is clearly traced when creating directions capable of working almost infinitely (in theory).
• Focusing on NPV, it is difficult to judge the benefit of the investor - the participant of a particular project, and to understand how its minimum contribution should be.

Therefore, other techniques are used, in particular, the Gordon model. It allows you to estimate the cost of capital and. This is one of the species of the model in which the discount of income is reflected.

What goals she pursues:

• Evaluate the profitability of capital (meaning its own capital).
• Assess the cost of capital owned by the company.
• Rate the discount rate of the investment project.

What are subject to discount rate? Analyzing future investments are used by calculations, where discounting the flow of money in the future is taken into account. To carry out this calculation, you need to determine the value of the bet. Then you can understand what the impact of the cash value. For example, the source of project financing is bank loan. So the rate in the discounted version should be equal to the credit rate.

2. How the Gordon model works - a formula and calculation example

In order for the Gordon model to work, a number of certain indicators required for the calculations are necessary. Do not do without the value of current dividends, discount rates, planned dividends, and so on. Then it is possible to make an assessment of the growth of net profit and get an idea of \u200b\u200bthe company's profitability.

Estimation of the growth of dividends from stocks according to the Gordon model - which is meant in this model:

• The company is currently paid dividends, their size is indicated by the value D..
• It is planned to increase the size of dividends, while the rate does not change and equal to the value G..
• The size interest rate Shares (discount rates) permanent, equal k..

In this case, you can calculate current price Shares R:

In other words, profitability for the next year will be 30% . You can rely on the period of 12 years. The calculations will require statistical data provided by official sources.

3. Pros and cons use of the Gordon model

How to find out the number defining the value of any company? By learning (analysis) of its assets or the method of comparing similar companies. One of the options for an approach is an analysis of income than and notable model of Gordon. However, this model has its own limitations.

Model Gordon is unacceptable in the following cases:

• The sustainability of the situation in the economic sphere is violated.
• When the company is characterized by stable volumes of produced goods along with a stable marketing.
• The credit resource is always available.
• The discount rate is greater than the growth of payments by dividends.

The market must have stability against the background of constant growth of the economy. Then you can talk about an adequate analysis of the future profit and the cost of business using the Gordon method. The model is successfully used for largest companiesbelonging to the oil and gas or raw materials. If the market is under development, the result will be distorted.