Dividend Discount Model (DDM) Assume VoP, Equation (3) implies a convenient expression for the discount rate: Di k-g Vo= Po 100 Do x (1+9) Po +9 Po Dividend Discount Model (DDM) Example Dividends are expected to grow at 5% per year and the current dividend is $5 per share. The expected rate of return is 10%. What should the current stock price be