Perpetuity growth method

Computing terminal value as the final year's cash flow grown one more period and divided by the discount rate minus the perpetual growth rate.

The single hardest discipline is the growth rate itself. Nothing can grow faster than the economy forever, because it would eventually become the economy, so a perpetual rate above long-run nominal growth is arithmetically impossible rather than merely optimistic. For India that ceiling is somewhere around 5% to 6% in real terms plus inflation; for a mature American business, 2% to 3% is the working range.

The formula is also explosive as growth approaches the discount rate. At an 11.5% discount rate, moving perpetual growth from 4% to 6% raises terminal value by 45%, which is why a model that needs 6% to justify the current price is telling you something about the price.

Cap the rate, then test what the price implies.