Expected future dividend payments cannot, however, simply be added up in order to reach a value for a corporation's stock. In part, that is because of the effect of inflation, but even without inflation the value of a dollar received in a year's time is less than that of a dollar received now, because the latter can be invested and earn interest. To work out the value of a stock, expected future dividends have therefore to be "discounted": their present value has to be calculated using an appropriate interest rate." Hence the name "dividend discount model."

Donald MacKenzie, An Engine, Not a Camera, loc. 205