medium · Principles of Finance time-value-of-money

Why is it often stated that no asset can grow at a constant rate (g) that is permanently higher than the discount rate (r)?

1. Taxes on unusually high growth rates simply make the firm's net after-tax return lower than the discount rate.
2. Interest rates across the whole economy always rise automatically to match the growth rate of any one specific asset.
3. The asset would eventually become larger than the entire economy, and its present value would be infinite.
4. The Gordon Growth Model formula mathematically only permits negative growth rates for any asset.

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