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business1

  • 3 years ago

company being valued is in industry undergoing change; in 5 - 10 years business model in industry will be totally different, company unlikely to adapt. correct to: a) value flows for next 5 years with no growth, + b) value flows for following 5 years with annual growth (-10%), c) assign no terminal value? thanks

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  1. Aswath
    • 3 years ago
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    If you feel the company will not adapt, you should estimate cash flows from years 6-10 and then either assume that the firm liquidates or assume that the firm will shrink over time (a negative terminal growth rate)

  2. business1
    • 3 years ago
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    thanks

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