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Hello sir, I would like to ask a question.
Under dividend growth model, do they assume a constant share price?
Not at all !!!
As I do explain in my lectures, if dividends are increasing at (say) 5% per year the the share price will also increase at the same rate of 5% per year.
Think about it, the market value of the shares is the present value of future expected dividends. In one years time all the expected future dividends will be 5% higher and therefore the PV of the then expected dividends will also be 5% higher.
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