G in a DCF for a company with an important part of sales in Asia
Hi everyone,
I know that the standard g in a DCF should not be more than 2% in order to be consistent with the inflation rate or the growth of real GDP. However, I'm currently doing a DCF for a an American company which has more than the half of its sales made in the Asia-Pacific area. In order to find my g, I took the Bloomberg estimates of growth of real GDP for each area (the ones for 2022, since I assume there is a catch-up effect in 2021, probably still present in 2022 but perhaps less significant) and then weighted them by the percentage of sales made in those areas. By doing that, I have a g of 3,77%.
Do you think that this is an acceptable outcome or should I stay under 2% (this is not for professional purposes but for school, however the project will be evaluated by a professional, not a professor) ?
.
Extened your forecast period rather than going over 2%. In HK, on a side note, we never go over 1% for g. Even 2% is considered too aggressive.
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