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In the dividend discount model (DDM) we assume that the required rate of return is higher than the long-term growth rate, in the discounted cash
In the dividend discount model (DDM) we assume that the required rate of return is higher than the long-term growth rate, in the discounted cash flow (DCF) model we assume that the weighted average cost of capital (WACC) is greater than the long-term growth rate. In the DDM model we assume that at some point dividends grow at a constant rate forever, in the DCF model we assume that at some point free cash flows grow at a constant rate forever. Which model do you think is a better model?
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