Session 10: Growth and Terminal Value

If this session seems to pass by in a blur, it is because we covered a lot during the class. We started with a continuation of our discussion of fundamental growth rates, starting with non-cash net income and then moving on to operating income. We then looked at the more general question of how to estimate growth and cash flows, when margins are changing. In particular, I used Airbnb’s IPO valuation as an illustrative example. If you are interested in getting more detail on my reasoning, you can try this post that I had at the time of the IPO: https://aswathdamodaran.blogspot.com/... In the second half of the class, we looked at the elephant in the DCF room, the terminal value, and laid out broad constraints that keep it in check. In furtherance of that discussion, I would like you take a look at five posts that I had on terminal value on my blog that cover the spectrum of questions related to it: http://aswathdamodaran.blogspot.com/2... http://aswathdamodaran.blogspot.com/2... http://aswathdamodaran.blogspot.com/2... http://aswathdamodaran.blogspot.com/2... Start of the class test: https://www.stern.nyu.edu/~adamodar/p... Slides: https://www.stern.nyu.edu/~adamodar/p... Post class test: https://www.stern.nyu.edu/~adamodar/p... Post class test solution: https://www.stern.nyu.edu/~adamodar/p...