The dividend discount model (DDM) is a technique for valuing a company’s stock based on the estimation of future dividends and the discount rate. For example, understanding how to calculate DDM in Excel empowers investors to analyze potential investments and make informed decisions about stock purchases.
The DDM holds significance as it provides insights into a company’s future cash flows and the present value of its potential dividend payments. Its application in Excel offers convenience and accuracy in calculations, enhancing its accessibility for investors.