The "right" assumptions
This decomposition is referred to in general finance as the Gordon Constant Growth Model. It implies that d is strictly greater than g. If d is less than g one has a negative capitalization rate which makes little sense. If d is equal to g one is trying to divide by zero, an undefined mathematical operation.
Perhaps most troubling is that this model requires that growth be constant, something we question in Real Estate Tool #6.
Nonetheless, this model is a convenient abstraction for our purposes here.
