Misapplication of Gordon Growth Model Can Lead to Undervaluing

Business Valuation UpdateVol. 21 No. 5
May 2015
Drew E. Voth, CPA/CFF, CVA, CIRA, CFE

Summary

Every valuation analyst is taught the Gordon growth model in Valuation 101: P0 = D1/(r - g). The math behind the model isn’t particularly complex, but I keep seeing the same mistakes committed by practitioners attempting to apply it. The purpose of this a ...