Gordon Shapiro formula, am I crazy??

Hi everyone, I'm having trouble understanding how we find the Gordon Shapiro formula. Since it's the same demonstration that EV with a constant growth rate g, I'll be working with that.
Now, EV= sum(n:0-->infinity) of [FCFF(n)]/[(1+WACC)^n] = FCFF(0) * sum(n:0-->infinity) of [(1+g)^n]/[(1+WACC)^n] ... quite logic until now I hope..
Now that's an infinite series, who only converges if 1+g1+WACC which I'll be assuming here
In that case, the series is equal to [1+g]/[WACC-g], which means that in the Gordon Shapiro formula the result should be
FCFF(0)*(1+WACC)/(WACC-g) and not simply FCFF(0)/(WACC-g) ...
What am I missing here ?? Would you please help, I've been puzzled for weeks now, and I hate to learn things without bothering to know what they mean and not understanding why they are so..

Thanks in advance.

1 Comments
 

Expedita enim quisquam ad et et tempore tempora. Accusantium nostrum ex eos quibusdam veniam unde. Porro vitae ullam explicabo in omnis.

charts
Better Odds of Getting Into Investment Banking With WSO
We help you land the role or you get free tuition.

Career Advancement Opportunities

October 2026 Investment Banking

  • Evercore 01 99.5%
  • Moelis & Company 01 99.0%
  • JPMorgan 01 98.4%
  • Guggenheim Partners 02 97.9%
  • Morgan Stanley 06 97.4%

Overall Employee Satisfaction

October 2026 Investment Banking

  • Moelis & Company No 99.5%
  • Morgan Stanley 02 99.0%
  • Evercore 01 98.4%
  • Banco Santander 02 97.9%
  • BMO Capital Markets 13 97.4%

Professional Growth Opportunities

October 2026 Investment Banking

  • Evercore 01 99.5%
  • Moelis & Company 01 99.0%
  • Morgan Stanley 05 98.4%
  • Goldman Sachs 01 97.9%
  • JPMorgan No 97.4%

Total Avg Compensation

October 2026 Investment Banking

  • Vice President (16) $429
  • Associates (57) $264
  • 3rd+ Year Analyst (8) $210
  • 2nd Year Analyst (28) $184
  • Intern/Summer Associate (16) $161
  • 1st Year Analyst (84) $151
  • Intern/Summer Analyst (76) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”