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Select the table range starting from the left-hand side, starting from 10% until the lower right-hand corner of the table. It is important to note that this is sub-divided into two steps.

Select the What-if Analysis tool to perform Sensitivity Analysis in Excel.

Why is it done like this? We will use What if Analysis this is a way to instruct Excel that for the Input (ke), the corresponding formula provided on the right-hand side should be used to recalculate all the other input. The space provided by the blank row is now used to provide input (expected return Ke) and the output formula.

Link the reference Input and Output as given the snapshot below.

This blank row serves an important purpose for this one-dimensional data table, which you will see in Step 2. Also, please note a blank row (colored in blue in this exercise) below the table heading. In our example, inputs are the expected rate of return (ke). In the first column, you have the input assumptions.

P = D1/r-g (P = stock price, g = constant growth rate, r = rate of return, D1 = value of next year's dividend)īelow are the steps that you can follow to implement a one-dimensional sensitivity analysis in excel. Gordon Growth formula Gordon Growth Formula Gordon Growth Model derives a company's intrinsic value if an investor keeps on receiving dividends with constant growth forever. read more) below to understand this in detail.Ĭonstant growth DDM gives us the Fair value of a stock as a present value of an infinite stream of dividends growing at a constant rate. In other words, it is used to value stocks based on the future dividends' net present value. Let us take the Finance example ( Dividend discount model Dividend Discount Model The Dividend Discount Model (DDM) is a method of calculating the stock price based on the likely dividends that will be paid and discounting them at the expected yearly rate. #1 – One-Variable Data Table Sensitivity Analysis in Excel

#3 – Goal Seek for Sensitivity Analysis in Excel.

#2 – Two-Variable Data Table Sensitivity Analysis in Excel.#1 – One-Variable Data Table Sensitivity Analysis in Excel.