Dividend discount model is used to calculate the growth rate of stock. Generally there is infinite life of stock. If there is a known growth rate of the dividends of the stock each year, it is evaluated as growing perpetuity. It is not possible to apply standard value tables on a growing perpetuity. But a mathematical identity makes it possible to find the present value of the perpetuity. Such mathematical identity is referred to as Dividend Discount Model (DDM). Dividend discount model is named as Gordon’s Growth Model and is given by the following formula