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If you forecast perpetual dividend growth at a rate higher than investors' required return, then two things happen: The formula explodes and gives nutty values.
If you forecast perpetual dividend growth at a rate higher than investors' required return, then two things happen: The formula explodes and gives nutty values. Eventually such firms would become very small as compared to the entire economy You know your forecasts must be wrong because the present value * far-distant dividends would be incredibly high. It would be difficult to find the present value of the shares of such companies
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