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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Values Growing Onwards vs. Values Growing to Perpetuity
Good day Sir,
Is there a difference between a value growing onwards vs. a value growing to infinity?
For e.g. 4 year onwards vs. 4 years to infinity.
What implications do they have when the examiner says for instance:
that “…the annual growth rate of the company’s free cash flows is expected to be 3% for the foreseeable future…” cited from Cigno Co Dec 2015.
They both mean the same.
The statement from Cigno means that the FCF’s will inflate at 3% in perpetuity.
The discounting of inflating perpetuities is dealt with in our free lectures for AFM (and for Paper FM as well because it revision from Paper FM).