In practice, the use of the dividend discount model is refined
from the method presented in the textbook. Many analysts will
estimate the dividend for the next 5 years and then estimate a
perpetual growth rate at some point in the future, typically 10
years. Rather than have the dividend growth fall dramatically from
the fast growth period to the perpetual growth period, linear
interpolation is applied. That is, the dividend growth is projected
to fall by an equal amount...