The Gordon Growth model is an offshoot of the standard dividend discount model. This model is used primarily to calculate the intrinsic value of a firm based on the discounted value of future dividends. The Equation At a basic level the Gordon Growth Model is calculated by: P = D1 / r-g P = The intrinsic price you should pay for the firm D1 = The dividend for the next period R = The current discount rate, for our purposes we will use the CAPM for this G = Is the dividend growth rate Applying the Gordon Growth Model So,