The sum of infinite geometric period terms with ratio 2 + ... = 1 / (1-). Let P_t = the price and D_t = the dividend of a share in period t, the expected return of the share, which is also used as a discount factor, and g = the rate of change of dividends. Given that

.Using formula (1) j) calculate the share price P_t according to Gordon's model, and ii) explain under what conditions Gordon's model is applicable.

Pt=(1+1+g)Dt+(1+1+g)2Dt+(1+1+g)3Dt+