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##### Asked by: Solange Sorribes

personal finance financial planning# What is H in the H model?

Last Updated: 22nd February, 2020

**H**-

**Model**is a modification of the Two Stage DDM. Unlike other two-stage

**models**where the growth rate is assumed to be a constant, the

**H**-

**Model**assumes that the growth starts at a higher rate, and then gradually declines till it becomes normal stable growth rate. “

**H**” represents half-life of the high growth period.

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Similarly, you may ask, what is the H model?

The **H**-**model** is a quantitative method of valuing a company's stock price. Every publicly traded company, when its shares are. The **model** is very similar to the two-stage dividend discount **model**. Thus, the **H**-**model** was invented to approximate the value of a company whose dividend growth rate is expected to change over time

Secondly, what is two stage dividend discount model? The **two**-**stage dividend discount model** comprises **two** parts and assumes that **dividends** will go through **two stages** of **growth**. In the first **stage**, the **dividend** grows by a constant **rate** for a set amount of time. In the second, the **dividend** is assumed to grow at a different **rate** for the remainder of the company's life.

Also, what is multiple growth model?

The Gordon **Growth Model** (GGM) is used to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate. Because the **model** assumes a constant **growth** rate, it is generally only used for companies with stable **growth** rates in dividends per share.

How is PVGO calculated?

**PVGO formula** NPV = F / [ (1 + r)^n ] where, PV = Present Value, F = Future payment (cash flow), r = Discount rate, n = the number of periods in the future projects. where dividends represent 100% of earnings, making div = earnings for this assumption, and growth = 0.