Perpetuity Growth Rate Selection

This problem practices a core judgment in intrinsic valuation, choosing the perpetual growth assumption that feeds into a terminal value. Candidates need to understand that the long-term rate should reflect a stable, sustainable steady-state period, not a short-term burst of growth, and that it must remain economically plausible over an extended horizon. Interviewers ask this because terminal value often drives a large share of valuation output, so they want to see whether you can make disciplined assumptions, use sensible benchmarks such as broad economic growth or the risk-free rate, and sanity check whether the company could realistically grow at that pace for a very long time.