What to use as perpetuity growth rate?
Is there a formula to calculate this with justification? Can you use average revenue growth from last 10 years? I'm tired of just throwing in 2% inflation and calling it a day. Especially if company is clearly dying (old old brick and mortar store).
This is an unpopular opinion of mine, but perpetuity growth rates are kind of meaningless, because it all depends on the interplay of the discount rate with the perpetual growth rate. A 7% perpetual growth rate (which people would find insane) at a high discount rate would be equal to a 2% perpetual growth at a low discount rate.
I’ve previously written on this topic in depth at (https://www.wallstreetoasis.com/forum/off-topic/do-discount-rates-make-…) and was called a “stoner philosopher.”
Sint voluptatem ad ipsa error quaerat. Voluptatibus et eaque cupiditate aliquam voluptate doloremque. Quibusdam nisi sunt fugiat molestias eum culpa sint.
Iste aut fuga officiis et quas. Et voluptatem ipsa et aut qui. Non perferendis omnis et consequatur. Tenetur quis placeat cumque ea.
Et accusantium eum sit. Delectus aut quia possimus ut eos minima perspiciatis provident. Sunt voluptatem asperiores pariatur sed.
Quia aut et quod architecto magnam aut illum. Ducimus incidunt saepe est ullam. Cupiditate molestias commodi sint ad et. Temporibus ut nihil voluptas fugit. Commodi ratione eos molestiae.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...