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Questions and Answers
What is a common way to select the appropriate exit multiple when calculating Terminal Value?
Why is it recommended to show a range of exit multiples when calculating Terminal Value?
In which scenario will the Gordon Growth formula for Terminal Value yield a higher valuation?
What does the Gordon Growth formula aim to estimate in a discounted cash flow valuation?
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Why is it challenging to predict whether the Gordon Growth formula will result in a higher valuation?
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When determining Terminal Value using the Gordon Growth formula, what does a higher discount rate imply?
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When using the Gordon Growth Method to calculate Terminal Value, what value is multiplied by (1 + Growth Rate) in the formula?
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In the context of the Gordon Growth Method, what does the Discount Rate represent?
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What does the Gordon Growth Method estimate in relation to a company's financials?
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Why might a financial analyst use the Multiples Method instead of the Gordon Growth Method when calculating Terminal Value?
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Which factor plays a crucial role in deciding whether to use Gordon Growth or Multiples Method for Terminal Value estimation?
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What important assumption is made when using the Gordon Growth Method for Terminal Value calculation?
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What is the formula to calculate Terminal Value according to the text?
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Why must the Terminal Growth Rate be very low according to the text?
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What does 'a' represent in the geometric series formula mentioned in the text?
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Why does each individual item in a geometric series approach $0 as the series approaches infinity, as per the text?
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What is 'r' in a geometric series formula as mentioned in the text?
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What would happen if the Terminal Growth Rate exceeds the country's GDP growth rate, based on the text?
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