And this is the case that is while there are going to be two cases on this page

and they basically are used in all feasible cases of valuation.

So first of all, this is case 3A.

This is temporary so-called supernormal growth

and then no growth.

Well, when we talk about supernormal,

that doesn't have to be very fast.

That just means that now remember this N the time horizon.

So for this N periods, normally N years,

we say that the company grows at a certain rate.

And then beyond this N, there are two options.

One, there's no growth. So, this is this case.

And then case 3B will be constant growth that is normally slower.

So, the formula here becomes somewhat more cumbersome, I would say.

So what I would put,

but this is the central formula so this is important to remember that.

So this is B_sub_zero is equal to X_sub_zero,

one minus T, one minus BS,

that stands for supernormal growth.

And here comes the following sum T from one to N,

which is the time horizon,

and here comes one plus GS divided by one plus K,

and all that to the t-th power.

So, this is the sum and this is

the so-called the first part of the first term and then comes the second part which is

X_sub_zero times one minus T divided by K. And here

comes one plus GS divided by one plus K and all that to the nth power.

So, this is oftentimes called tail or terminal value.

Now, this is the most general formula that is used in all valuations.

And normally, people just put that slowly in their computers to make

sure that they do not commit mistakes and then use it thereafter.

Now, case 3B also very widely used.

This is temporary supernormal growth plus constant growth.

Now clearly, in this case,

the first term will stay the same.

So, I will not put that, otherwise,

it will be too many numbers or too many formulas on this page.

But I would say that in this case,

the terminal value or tail changes somewhat.

Here, it's just this.

Now, it will be X_sub_zero times one minus T times one minus bC,

so that is the b for constant growth.

That is different from this B for supernormal growth.

And then it's also one plus

GC divided by K minus GC,

and here comes this one plus GS,

one plus K to the nth power because basically,

why is this the same?

Because the base for no growth over super supernormal growth is the same.

But then, this refers to the new growth at the constant rate of GC.

This refers to no growth.

So, we are almost all set here and in the next episode,

I will just provide some shortcuts and then examples for that.