DCF Projections
Hi monkeys,
Going over how to make projections in a DCF and I understand that all of this can vary largely depending on the industry, business segment, economic cycles and etc, but when you are making these assumptions for the line items as a percentage of revenue, why is it that it has to decline towards the end of your forecast and close to the GDP growth rate or your terminal value growth rate? I get why terminal value growth rate should be close to GDP or inflation rate, but what if the business truly has large potential for growth? And at what point do you know during your projection years whether it's at its peak and starts declining? Slightly new to this concept and would appreciate any insights.
Thank you
BumP
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