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Dividends are all over the place they may grow in a super normal rates for several years and then step back to a more normal rate so we’re going to use the call that one the wildly fluctuating or general stock valuation model it’s the first equation you see here another equation should memorize is the zero dividend growth case so what happens if GM who used to pay two dollars a year continues to pay two dollars here fore verso two dollars two dollars two dollars two dollars we know that that’s an annuity.

Hopefully it will go on forever we know GM’s case it hasn’t they’ve stopped paying their two-dollar dividend due to financial difficulties but if there were company to come about that would Adelaide Property Valuers be a constant dividend every year same amount each year that becomes annuity for goes on forever its perpetuity and we remember from session that present value of perpetuity and c/ are so here we substitute the dividend value in there and you get d over our stock price today if we have a constant dividend.

Growth mcdonalds recently announced that they were going to pay constant four percent growth in dividends try to anyway that was their model in their plan and so if we have a constant dividend growth railway know that the price of the stock today is equal to the next dividend over R minus g where g is the constant growth rate in the dividends will talk more about that model we have super normal super normal growth again we’re company grows very very fast to begin with and then starts to level out we go back to the general stock valuation equation or what I call wildly fluctuating where the present value or price of the stock today is equal to the future dividends discounted back to today plus some price of the stock at some time T discounted back to today and finally.

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