Can someone explain the “half life” component of the H model. When calculating the extra value from the high growth years, why do I use time / 2 rather than the actual number of years?
look at it as a triangle stacked on its side. And you are finding the area of the triangle. base = High Growth period growth rate. gh H = Height of the triangle. the intermediate growth period. other side = Low growth period growth rate gl area of the triangle = (gH-gl)*H/2
Yeah I realized this a little bit after the post, dividing by 2 just linearly decreases the high growth rate. Thanks.
Ahhh that makes sense to me. The ol’ 1/2 * base * height formula from 8th grade