54,471) ($4,404,585) ($4,868,081) ($4,868,081) Net Income $5,075,928 $4.976,222 $5,502.365 $6,082,522 56.722.589 $6,722,589 Horizon Value (Gordon Growth uodelr $49,459.045 DiscouM Rate' 17% Long-term growth raw 30% Days 206 573 938 1.303 1.668 1.668 Present Value Factors 1.0000 0 9144

ue banks There are many formulaic single-stage versions of the Dividend Discount Model (DDM). The best known and a version we support is called the Gordon Growth model. This model is as simple as dividing any company's current dividend per share (DPS) by its nominal cost of equity less its long-term dividend

PE = COE UV C. Ch. &WM The commonly used "wrong" PB formula (on the top right above) has two critical flaws in its derivation from the proper Gordon Growth dividend discount model: • It assumes accumulated ROE = incremental ROE • It does not account for long-term EPS growth driven by inflation Rarel