DDM and Gordon Growth Model

[Poch213]

Hi Guys,
I am really struggling with trying to decipher when I should be using (1+k)^n as the denomiator and (k-g). This is when both the growth rate and the required rate is shown. Surely there should be no difference, but somehow there is.
Thanks

 

[S2000magician]

When you’re discounting a single cash flow n periods from today, with a discount rate of k per period, you divide by (1 + k)^n.
When you’re discounting a series of cash flows that meet these criteria:

• They start 1 period from today
• They continue forever
• They grow at a rate of g per period
• The discount rate is k per period

you discount the first cash flow by k − g.