Hi, I keep getting confused with dividend calculations. So if a company will start paying dividend after 4 years and the first dividend is $1 and growth rate is 5%. r is 7%. What is the value? Shouldn’t 1 x (1+5%)/ (7% - 5%)(1+7%)4 be equal to 1/ (7% - 5%)(1 + 7%)3.
How do I know when to use the former and when to use the latter?