Equity

In Residual Income formula derivation from DDM formula, I had a doubt.

How do you go to the second equation from the first?

V0=E1+B0−B1^(1+r)1+E2+B1−B2^(1+r)2+E3+B2−B3^(1+r)3+… (eqn 1)

This equation can be rewritten as follows:

V0= B0 +E1−rB0(1+r)^1+E2−rB1(1+r)^2+E3−rB2(1+r)^3+… (eqn 2)

I understand clean surplus equation, B0-B1 = rB0, but I just cannot understand from where this B0 came from in the second equation.

Pls help.

Many people don’t know where their b.o. comes from either… Just dont raise your hand.

Here is the proof:

Will have a look later.