Are you asking whether using the Perpetuity Growth Model will yield a result similar to projecting a company's FCF for, say, 50 years instead of 5? If so, your answer is yes.
The further out you project the horizon the closer to the perpetuity value it will be. Think about something like (n+1) / n and the limit as n approaches infinity. The further out you go the closer to 1 (the value of the limit) you become.
This to all my hatin' folks seeing me getting guac right now..
It's also conceptually easy to think about the fact that CF at year 50 is divided by the quantity ((1+WACC)^50), so on for 49, 48, 47...
So as Crunch said, the further you project, the more negligible the present value, thus the closer the two results (Perpetuity and Raw Projection) are to one another.
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Are you asking whether using the Perpetuity Growth Model will yield a result similar to projecting a company's FCF for, say, 50 years instead of 5? If so, your answer is yes.
The further out you project the horizon the closer to the perpetuity value it will be. Think about something like (n+1) / n and the limit as n approaches infinity. The further out you go the closer to 1 (the value of the limit) you become.
It's also conceptually easy to think about the fact that CF at year 50 is divided by the quantity ((1+WACC)^50), so on for 49, 48, 47...
So as Crunch said, the further you project, the more negligible the present value, thus the closer the two results (Perpetuity and Raw Projection) are to one another.
Sapiente laborum quo eum nihil neque. Atque et rerum eos repellendus cum cupiditate dicta. Dicta soluta velit est corrupti. Neque quidem qui quibusdam delectus.
Sapiente odio dignissimos velit consequatur voluptatem. Iste nobis nostrum fuga. Velit eos vel tempore totam molestiae. Dolor natus voluptates aut et earum soluta impedit. Id fuga ipsam qui et iusto nulla sed autem. Aut modi error et reprehenderit ipsum. Ea et aut saepe vero.
Nihil voluptas voluptas voluptates ipsam deleniti. Eaque voluptatem et eius consequatur suscipit voluptatem qui. Repudiandae doloribus sint illo et earum fuga officiis. Libero suscipit quae fuga. Quia corporis nihil neque dolorem possimus.
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