We review the *intuition* behind the Gordon Growth Formula used to calculate Terminal Value in a Discounted Cash Flow (DCF) analysis.
By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
Lots of people, textbooks, training programs, professors, and so on present this formula, but hardly anyone takes the time to explain what it means, where it comes from, and how it works.
We'll explain here both the INTUITION behind the formula, and
then also give a mathematical derivation for it, based on the
sum of a geometric series.
If you like math, you'll really like that part!
http://www.mergersandinquisitions.com/
