deletions | additions       diff --git a/section_textit_DDM_textit_RIM__.tex b/section_textit_DDM_textit_RIM__.tex  index e97bd49..90bc9d5 100644  --- a/section_textit_DDM_textit_RIM__.tex  +++ b/section_textit_DDM_textit_RIM__.tex 
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where $P_{t}$ is the stocks price at $t$, $D_{t+i}$ the future dividend at $t+i$, $R$ the discount rate and  $P_{t+K}$ the terminal value. Again, $R$ is necessarely the average total return of the shareholder over one period if he pays $P_{t}$, receive $D_{t+1}$,$D_{t+2}$, . . . $D_{t+K}$ and sells the stock at $P_{t+K}$. It is worth mentioning that the dividends are always reinvested and that the total shareholder return is going to be $(1+R)^K-1$ over $K$ periods.  \\  \\  The Gordon Growth Model is a simple version of the DDM where it is assumed that  dividends will grow at a constant rate, duration of equity is infinite so that terminal value  is negligeable: 
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where $g$ is the expected constant dividend growth rate to perpetuity.This equation highlights  the fact that future returns are driven by the current valuation and future growth.  \\  \\  Although the DDM is theoretically correct, it carries some well known caveats. One in  particular is its expression of equity valuation purely from a dividend distribution standpoint.  Value creation is not apparent in this formula. By injecting the book value of equity in the  DDM one can explain how dividends are generated through time and why investment and  economic returns are at the basis of dividend growth and value creation. The Residual  Income Model (RIM hereafter) makes this possible.  \subsection{Linking the \textit{RIM} with the \textit{DDM}  2