Regarding the H model in Discounted Divident Model in SS11, Reading 34, I don’t quite understand the formula:

V0 = D0*[1+g(l)] / [r-g(l)] + D0*H*[g(s)-g(l)]/[r-g(l)] (Sorry I don’t know how to make it prettier)

I understand the first term is to calculate the value assuming the company grow at g(l) forever, got it, so 2nd term should mean the additional effect when the growth rate drop from g(s) to long term sustainable rate g(l) across the first few years. Since this process won’t last forever, why would we use [r-g(l)] in the denominator as if it’s in Gordan Growth model?

It’s a good question and I dont have an answer to it. I see where you come from, but since this is not an annuity, I’d say denominator should be [1+ (gs+gl)/2]^H or something like that? i.e. something more close to discount rate.