Question: Question 7: The Discounted Dividend Model is defined as any model that computes the value of a share of stock as the PV of its

Question 7: The Discounted Dividend Model is defined as any model

Question 7: The Discounted Dividend Model is defined as any model that computes the value of a share of stock as the PV of its expected future cash dividends. Solving for the market capitalization rate we have: Di + P1 - P. (1) Po a) Interpret the meaning of the equation above (7pts). With a Constant Dividend growth, the equation changes to: D k= +9 (2) (2) b) Interpret the equation above. (8pts)

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