What's An Appropriate Growth Rate To Use When Calculating The Termina

1.	What's An Appropriate Growth Rate To Use When Calculating The Terminal Value?
Answer» Normally you use the country's long-term GDP growth rate, the rate of inflation, or SOMETHING SIMILARLY conservative. For companies in mature ECONOMIES, a long-term growth rate over 5% WOULD be quite aggressive SINCE most developed economies are growing at less than 5% per year. Normally you use the country's long-term GDP growth rate, the rate of inflation, or something similarly conservative. For companies in mature economies, a long-term growth rate over 5% would be quite aggressive since most developed economies are growing at less than 5% per year.

What's An Appropriate Growth Rate To Use When Calculating The Terminal Value?

Answer»

Normally you use the country's long-term GDP growth rate, the rate of inflation, or SOMETHING SIMILARLY conservative.

For companies in mature ECONOMIES, a long-term growth rate over 5% WOULD be quite aggressive SINCE most developed economies are growing at less than 5% per year.

Normally you use the country's long-term GDP growth rate, the rate of inflation, or something similarly conservative.

For companies in mature economies, a long-term growth rate over 5% would be quite aggressive since most developed economies are growing at less than 5% per year.

Discussion

No Comment Found

Related InterviewSolutions

What Types Of Sensitivity Analyses Would We Look At In A Dcf?
Why Would You Not Use A Dcf For A Bank Or Other Financial Institution?
What Should You Do If You Don't Believe Management's Projections For A Dcf Model?
How Do You Calculate Wacc For A Private Company?
What About A 1% Change In Revenue Vs. A 1% Change In The Discount Rate?
Which Has A Greater Impact On A Company's Dcf Valuation - A 10% Change In Revenue Or A 1% Change In The Discount Rate?
Two Companies Are Exactly The Same, But One Has Debt And One Does Not - Which One Will Have The Higher Wacc?
How Can We Calculate Cost Of Equity Without Using Capm?
Cost Of Equity Tells Us What Kind Of Return An Equity Investor Can Expect For Investing In A Given Company - But What About Dividends? Shouldn't We Factor Dividend Yield Into The Formula?
What's The Relationship Between Debt And Cost Of Equity?