Equity

[gargijain]

In Residual Income formula derivation from DDM formula, I had a doubt.

How do you go to the second equation from the first?

V0=E1+B0−B1^(1+r)1+E2+B1−B2^(1+r)2+E3+B2−B3^(1+r)3+… (eqn 1)

This equation can be rewritten as follows:

V0= B0 +E1−rB0(1+r)^1+E2−rB1(1+r)^2+E3−rB2(1+r)^3+… (eqn 2)

I understand clean surplus equation, B0-B1 = rB0, but I just cannot understand from where this B0 came from in the second equation.

Pls help.

[125mph]

@gargijain

but I just cannot understand from where this B0 came from

Pls help.

Many people don’t know where their b.o. comes from either… Just dont raise your hand.

[iceman_1212]

Here is the proof:

[sydneyguy]

@gargijain

In Residual Income formula derivation from DDM formula, I had a doubt.

How do you go to the second equation from the first?

V0=E1+B0−B1^(1+r)1+E2+B1−B2^(1+r)2+E3+B2−B3^(1+r)3+… (eqn 1)

This equation can be rewritten as follows:

V0= B0 +E1−rB0(1+r)^1+E2−rB1(1+r)^2+E3−rB2(1+r)^3+… (eqn 2)

I understand clean surplus equation, B0-B1 = rB0, but I just cannot understand from where this B0 came from in the second equation.

Pls help.

Will have a look later.