Valuation

Perpetuity Growth Method

Definition

What is Perpetuity Growth Method?

A terminal-value method assuming cash flow grows at a constant rate indefinitely.

Example in practice

Year-six cash flow is capitalised using the discount rate minus long-term growth.

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The price at which an asset could trade in the market at a given time.

An estimate of an asset's underlying economic worth based on expected cash flows, assets, or earning power.

An estimate of an asset's appropriate value under specified assumptions or accounting standards.

Present value of expected cash inflows minus present value of expected cash outflows.

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