Gordon growth model
A way to value an infinite stream of payments growing at a constant rate: next year's flow divided by the difference between the rate and the growth rate.
Formula
The perpetual growth rate and the discount rate, both as fractions of one. The formula is defined only while growth stays strictly below the rate.
How to read the number
It produces the terminal value in a discounting model and therefore decides most of the final valuation.
When the metric lies
Also known as: constant growth model