Why does the DDM Model not include a term for the re-sale value of the share?

Question

Why does the DDM Model not include a term for the re-sale value of the share?

Answer 1

because if they let you re-sale the DDM gets very depressed. sorry, i'm bored so i am attempting to answer questions which i don't understand.

Answer 2

because the DDM caculates value based on the present value of future dividends in perpetuity.   in theory, a future re-sale value would be calculated teh same way, and it's present value is simply the present value of the dividends.  so it would be redundant to calculate the PV of a future sale.

of course, this assumes you're using a fixed number for expected return.  if your expected return assumptions change over time, OR if your dividends payout rate assumptions change over time, then you wouldn't use teh DDM, but rather, you'd use its cousin, the discounted cash flow method.