corporate finance midterm

5- Below formula states that the current stock price is equal to the present value of dividend at year 1 and the present value of expected price of the stock at year 1 (assuming that we will hold the stock for exactly one year). Price=P0=1+rDIV1+P1 Below formula is simply the generalized version, where current price is composed of present value of all future dividends and future price at year H. P0=(1+r)1DIV1+(1+r)2DIV2++(1+r)HDIVH+PH=t=1H(1+r)tDIV1+(1+r)HPH Finally, the formula below is to estimate the current stock price with no time restriction but for assumed infinite lifetime of a stock. Here, DIV1 is the next year's dividend, r is the rate of return on equity and g is the assumed growth rate in dividends for the future. Price=P0=rgDIV1 Make an attempt to briefly explain this estimation. Why do we use a fixed growth rate in dividends? On the contrary to the previous two formulas, we do not have future price of the stock in this formula. Why