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Pascal PIERRE edited section_textit_DDM_textit_RIM__.tex
almost 8 years ago
Commit id: ff3bf0aa78ca521479a73926daa21f7a62fb9148
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diff --git a/section_textit_DDM_textit_RIM__.tex b/section_textit_DDM_textit_RIM__.tex
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--- a/section_textit_DDM_textit_RIM__.tex
+++ b/section_textit_DDM_textit_RIM__.tex
...
V_{t}=\displaystyle\sum_{i=1}^{K}\frac{C_{t+i}}{(1+R)^i}+V_{t+K}
\end{equation}
In other words,
R $R$ is what you earn if you pay $V_{0}$, receive $C_{1}$,$C_{2}$, . . . $C_{K}$ and sell the asset at
$V_{K}$. The value of the asset when you sell it is the terminal value of the asset. This basic principle is at the root of many equity valuation models; the \textit{DDM} is the exact translation of this accounting principle where dividends are the revenues a shareholder is entitled to.
\subsection{The \textit{DDM}}