Same cup , just a different perspective, same water.
The chart above demonstrates how this changes with growth prices that are different. It presumes a provider starts growing in the development rate on the y-axis. Every year, this growth rate falls 10%. On the x-axis, you can see the fraction of the business value (EV) that will be created in another 3 years.
Photo from Daniel Mayovskiy on Unsplash
However, this hedge fund investor stated it another way: 85% of the value of this company is going to be created in another 3 decades. At growth, the company’s value now is 77 percent of their value in three decades. & rsquo was won by the worth;t change. It’s already the most of the size it will be.
Instead of looking at rsquo now & ;s valuations as a multiple of earnings, we can consider it as a discount to the future price. That perspective concrete is made by this math.
Does increase rate matter so much? Why does valuation be influenced by growth rate much? I was reading a book recently written. His explanation was among the greatest I&rsquo.