Long Term Growth Rate Definition & Application Wiki

Long Term Growth Rate Definition & Application Wiki

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Short Definition

This is the rate of inflation in a conservative investment analysis. The expectation is that company revenue estimates will not surpass the inflation rate into the long term. Current US inflation expectations are 3%.

Growth rates above the 3% estimates are only appropriate if the investment time horizon is too short. This can occur, but with a 10 year horizon, this is unlikely for mature companies. LT growth estimates should not exceed the risk-free rate of interest as a good benchmark.

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