Changing a terminal growth rate by a mere 0.5% or adjusting the discount rate slightly can radically alter the calculated intrinsic value.
Highly unreliable due to speculative future growth assumptions. Replace with Asset Valuation and EPV. value investing bruce greenwald pdf
Explain Greenwald's specific formula for calculating Changing a terminal growth rate by a mere 0
Normalize current operating cash flows, remove growth-related capital expenditures, and capitalize the earnings by the weighted average cost of capital (WACC). remove growth-related capital expenditures
EPV=Normalized After-Tax Cash FlowCost of CapitalEPV equals the fraction with numerator Normalized After-Tax Cash Flow and denominator Cost of Capital end-fraction Step 3: Comparing Asset Value and EPV