deletions | additions       diff --git a/section_textit_DDM_textit_RIM__.tex b/section_textit_DDM_textit_RIM__.tex  index 51c215f..e97bd49 100644  --- a/section_textit_DDM_textit_RIM__.tex  +++ b/section_textit_DDM_textit_RIM__.tex 
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\begin{equation}  P_{t}=\displaystyle\sum_{i=1}^{\infty}\frac{D_{t+i}}{(1+R)^i}\approx\frac{D_{1}}{R-g}  \end{equation}  where g $g$  is the expected constant dividend growth rate in 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.  2  $EV_{t}=\displaystyle\sum_{i=t+1}^{t+K}\frac{FCFF_i}{(1+R)^i}+EV_{t+K}$