Definition for : Gordon-Shapiro formula

The Gordon-Shapiro formula calculates the Value of a Perpetuity growing at a constant rate g: PV = F/(k-g), where PV is the Present value of this Perpetuity, F – the Perpetuity, k – Cost of capital. (k>g)

(See Chapters Chapter 16 The time value of money and net present value and Chapter 32 Capital structure and the theory of perfect capital markets of the Vernimmen)

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