Just downloaded a case study from HBS titled, "Note on Alternative Methods for Estimating Terminal Value". I've been pondering the very notion that a person can and should value a 'business project' as having an infinite life. Thus, the cash flows will continue into perpetuity. Not sure if doing terminal value calculations for an infinite series of cash flows seems reasonable. Wouldn't it be more prudent to run models for, let's say, 25-40 years? I mean how many companies are there in the world that still exist after 40 years? Excluding companies that started as state monopolies, does anyone have that number handy?
Oh, the HBS case number is 9-2980166. If you get a chance, read it. It very enlightening.
Recent Comments