How the Potential Payback Period (PPP) Extends and Surpasses the Gordon Growth Model (GGM) at the Limits of Financial Theory

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1. Verfasser: Sam, Rainsy
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Sprache:Englisch
Veröffentlicht: Zenodo 2025
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author Sam, Rainsy
author_facet Sam, Rainsy
contents <p><span lang="EN-US">This article examines how the Potential Payback Period (PPP) extends and surpasses the Gordon Growth Model (GGM) at the limits of financial theory. Both models rely on discounted future cash flows and assume growth and required return, yet diverge under edge-case conditions. As the growth rate nears the discount rate, the GGM becomes unstable, producing infinite valuations. In contrast, the PPP remains coherent, resolving indeterminate forms via L’Hôpital’s Rule. When both growth and discounting are zero, PPP reduces to the P/E ratio, affirming its role as a generalization of traditional metrics. These findings highlight PPP’s robustness and clarity where GGM fails.</span></p> <p><span lang="EN-US"> </span></p>
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spellingShingle How the Potential Payback Period (PPP) Extends and Surpasses the Gordon Growth Model (GGM) at the Limits of Financial Theory
Sam, Rainsy
<p><span lang="EN-US">This article examines how the Potential Payback Period (PPP) extends and surpasses the Gordon Growth Model (GGM) at the limits of financial theory. Both models rely on discounted future cash flows and assume growth and required return, yet diverge under edge-case conditions. As the growth rate nears the discount rate, the GGM becomes unstable, producing infinite valuations. In contrast, the PPP remains coherent, resolving indeterminate forms via L’Hôpital’s Rule. When both growth and discounting are zero, PPP reduces to the P/E ratio, affirming its role as a generalization of traditional metrics. These findings highlight PPP’s robustness and clarity where GGM fails.</span></p> <p><span lang="EN-US"> </span></p>
title How the Potential Payback Period (PPP) Extends and Surpasses the Gordon Growth Model (GGM) at the Limits of Financial Theory
url https://doi.org/10.5281/zenodo.15442275