In this quiz-shortened session, we looked at the elephant in the DCF room, the terminal value, and laid out broad constraints that keep it in check. In particular, we looked at why the riskfree rate is a proxy for nominal growth in the economy, why you should not wait too long to put your company into stable growth, and why it is not growth, but steady-state return on capital is what determines terminal value. We closed the class by looking at the choices you face in building valuation models, and how you make them.
Slides: https://nyu.box.com/s/ua9xkqyud18dj6yuciidistbbeuwdi41
Post class test: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12Btest.pdf
Post class solution: https://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session12Bsoln.pdf
