If one uses the constant growth model to value stock, one assumes that P₁ = P₀ *(1 + g), P₂ = P₀ * (1 + g), etc.

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The provided formula appears to be incorrectly formatted or contains typographical errors, making it difficult to interpret accurately. However, the constant growth model (also known as the Gordon Growth Model) for valuing stock typically assumes that the price of a stock is equal to the dividend per share for the next year divided by the discount rate minus the constant growth rate of the dividends (P = D1 / (r - g)). The formula provided does not clearly represent this principle.

If One Uses the Constant Growth Model to Value Stock