Problem:
When investing in common stocks, market participants aim to purchase stocks that are undervalued. The discounted dividend model (DDM) is one of several approaches to determine if a stock in undervalued or overvalued. Both the zero growth and constant growth versions of the DDM discussed in Chapter 7 shows any signs of a present value process in their equations. How, then, can be said to involve a present value process?
Please explain in detail and also show all work.