deletions | additions       diff --git a/section_textit_DDM_textit_RIM__.tex b/section_textit_DDM_textit_RIM__.tex  index 4aa7e7a..000fd06 100644  --- a/section_textit_DDM_textit_RIM__.tex  +++ b/section_textit_DDM_textit_RIM__.tex 
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the fact that future returns are driven by the current valuation and future growth.  \\  \\  Although the DDM \textit{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}}  The RIM \textit{RIM}  developed by Ohlson and Felthman (1995) assumes an accounting identity, the clean surplus rule , which states that the change in book value is equal to the difference  between earnings and dividends $B_{t}-B_{t-1}=E_{t}-D_{t}$. Earnings that are not distributed  to investors are reinvested in the company. It then appears obvious that if a company’s 
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identities allows us to rewrite dividends as $D_{t}=B_{t-1}(1+R)-B_{t}+A_{t}$. Replacing $D_{t}$ with  this new expression into the \textit{DDM} formula (2) and operating some simplifications leads to  the following \textit{RIM} equation :  \begin{equation}  P_{t}=B_{t}+\displaystyle\sum_{i=1}^{K}\frac{A_{t+i}}{(1+R)^i}-B_{t+K}+P_{t+K}  \end{equation}