Dividend Discount Model Calculator
Use the Dividend Discount Model Calculator with your own values for Calculation mode, Dividend per period, Next dividend, Required return, Growth rate, Dividend cash flows, Terminal value, and Market price. It reports Intrinsic value, Value difference, and Premium or discount, shows the formula and worked example, and does not fetch live market or account data.
How to use this calculator
Enter Calculation mode, Dividend per period, Next dividend, Required return, Growth rate, Dividend cash flows, Terminal value, and Market price.
Review the model boundary before calculating: A constant-growth DDM requires the required return to exceed the perpetual growth rate.
Read Intrinsic value, Value difference, and Premium or discount, then compare the result with the cited source and governing product terms.
Formula
Formula used: V₀ = D / k; Vg = D₁ / (k − g); V = Σ Dₜ / (1 + k)^t + TV / (1 + k)^n. Percentages are converted to decimals before calculation.
Worked example
Example: with Next dividend = 2.00, Required return = 10%, and Growth rate = 4%, the calculated Intrinsic value is 33.33.
Assumptions and limits
- A constant-growth DDM requires the required return to exceed the perpetual growth rate.
- Dividends can be reduced, suspended, or changed and are not guaranteed cash flows.
- This educational estimate is not investment, tax, accounting, or legal advice.
Sources
- New York University Stern School of Business: Valuation ResourcesDividend, cash-flow, and relative valuation methods and their assumptions. Reviewed 2026-08-24.
- OpenStax, Rice University: Principles of Finance 2e — Dividend Discount ModelsOfficial formula or method source used by this calculator. Reviewed 2026-08-24.
- Aswath Damodaran, New York University Stern School of Business: The Dividend Discount ModelOfficial formula or method source used by this calculator. Reviewed 2026-08-24.
- OpenStax, Rice University: Principles of Finance 2e — Applications of Time Value of Money in FinanceOfficial formula or method source used by this calculator. Reviewed 2026-08-24.
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Verification
How this calculator is checked
Trust comes from reproducible evidence, not model confidence. You can inspect the formula, assumptions, worked example, and cited sources on this page.
- Versioned calculationFormula logic is kept separate from the interface and covered by automated registry and behavior checks.
- Cited evidenceSources linked for independent checking: 4.
- Transparent AI useAI may assist drafting or adversarial review. Agreement between models is not proof, and no human expert review is claimed unless a named reviewer is shown.
Risk-sensitive calculator. No human domain-expert review is recorded for this page. Treat the result as an educational estimate, not as medical, financial, tax, legal, electrical, engineering, or safety approval.
Frequently asked questions
How does the Dividend Discount Model Calculator work?
Formula used: V₀ = D / k; Vg = D₁ / (k − g); V = Σ Dₜ / (1 + k)^t + TV / (1 + k)^n. Percentages are converted to decimals before calculation.
What should I enter in the Dividend Discount Model Calculator?
Enter Calculation mode, Dividend per period, Next dividend, Required return, Growth rate, Dividend cash flows, Terminal value, and Market price using one consistent currency and time basis.
What should I verify before using the Dividend Discount Model Calculator result?
Verify these limits: A constant-growth DDM requires the required return to exceed the perpetual growth rate. Dividends can be reduced, suspended, or changed and are not guaranteed cash flows. This educational estimate is not investment, tax, accounting, or legal advice.
Last updated 2026-08-25 · zero-gordon-explicit-cashflows-v1 · content-2026-08-24 · Published by YunFanLabs