DDM

[anajolie23]

Hello everyone! I would like to understand why when they ask you to value the stock using DDM two years from now, the response uses 3 periods. It s pretty confusing, here it goes
a firm has constant growth of 7%, just paid a divident of 6.25. If r is 12% what will the stock sell for 2 years from now. How do i know this requieres a 3 period ?
thank you in advance !
The owl

 

[MTBR]

Are the dividends paid semi-annualy?

 

[S2000magician]

The Gordon growth model is generally written as:
P0 = D1 / (r − g)
More generally:
Pi = D(i+1) / (r − g)
Therefore:
P2 = D3 / (r − g)