FIRST PRINCIPLES OF VALUATION

The Constant Growth Case. A common stock with a constant dividend growth rate is like a perpetuity that is growing at this rate. We can develop the equation of a constant growth perpetuity as follows: P0 = D1 + D2 + D3 + … + D( , (1+r)1 (1+r)2 (1+r)3 (1+r)(with a constant growth rate , g, this equation becomes ................
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