


Give yourself a "margin of safety" by being conservative in your earnings assumptions.
In particular, it's safest to set the longterm earnings growth to zero: if a company actually had constant positive growth forever it would become infinitely big.
(If that didn't convince you, you can also see for yourself how some stock analysts come up with their lofty price targets:
keep the discount rate at eleven percent, and then see what happens to the theoretical stock value as you adjust the longterm growth rate from 10% to 10.9% to 10.99%...
You'll find that you can force the math to give you any answer you want.
So play it safe: if you want a meaningful answer that you can really understand, always assume that longterm growth is zero.)
