πŸ“Š Suitable long-term growth rate (g) fo ...

πŸ“Š Suitable long-term growth rate (g) for Terminal Value in DCF valuation should align with

Aug 02, 2023

πŸ› Factors to consider for g: Economic Conditions, Industry Growth, Company's Historical Performance, Competitive Position, Market Saturation, Regulatory and Political Environment, Long-Term Strategic Plans, Analyst Consensus.

πŸ“ˆ Economic Conditions: Consider country's GDP growth rate (e.g., 3%) and use slightly below (e.g., 2.5% to 3%) for valuation.

🌱 Industry Growth: Reflect higher growth potential (e.g., 4% to 5%) for industries like renewable energy with strong prospects.

πŸ“Š Company's Historical Performance: Analyze past growth rates (e.g., 5%) but be cautious and use a more conservative rate (e.g., 3% to 4%) if growth was influenced by external factors.

πŸ† Competitive Position: Strong market presence allows higher growth rate (e.g., 4% to 5%) due to competitive advantage.

πŸ“‰ Market Saturation: Mature markets may have lower potential, so consider a more conservative rate (e.g., 2% to 3%).

πŸ“š Regulatory and Political Environment: Account for potential risks with a slightly lower rate (e.g., 3% to 4%).

πŸš€ Long-Term Strategic Plans: Moderate ambitious projections (e.g., 5% to 6%) considering scaling challenges.

πŸ” Analyst Consensus: Consider industry expert projections (e.g., 3% to 5%) for additional insights.

πŸ’‘ Long-term growth rate should not exceed country's long-term GDP rate. Commonly used range: 2% to 4%.

πŸ”Ž Thoroughly analyze factors for informed and realistic valuations.

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