**Typically, the above formula will be applied such that the company is assumed to achieve maturity, or "constant growth". (Note that the value will remain identical: the adjustment is a "telescoping" device). Here, analysts commonly employ the Perpetuity Growth Model to calculate the corresponding terminal value[3] (although various, more formal approaches are also applied[4]). Then, assuming long-run, "constant", growth {\displaystyle g} from year {\displaystyle m} , the terminal value is**

Hereâ€™s the truth: a successful business is something that successfully solves a problem. And that business can make more money in two ways: solving more peopleâ€™s problems, or solving bigger problems. The cool thing about the EP Model is that sometimes these products donâ€™t even have to be yours. You can generate income by recommending other peopleâ€™s or companiesâ€™ services or products. This is called affiliate marketing. Itâ€™s actually how Iâ€™ve made most of my money since I started in 2008.

In equity valuation, residual income represents an economic earnings stream and valuation method for estimating the intrinsic value of a company's common stock. The residual income valuation model values a company as the sum of book value and the present value of expected future residual income. Residual income attempts to measure economic profit, which is the profit remaining after the deduction of opportunity costsÂ for all sources of capital.