Low intrinsic growth rate graph
Value investors like Warren Buffett have only two goals: 1) find excellent businesses and 2) determine what they are worth. But in order to determine what a company is worth, you will have to predict how fast the business will be able to grow its earnings in the future. How to come up with a realistic growth rate for your intrinsic value calculations is what this post is all about. We will first focus on understanding r (the intrinsic growth rate of a population) and how it affects population dynamics (or the size of populations over time). The intrinsic growth rate is the theoretical maximum rate of increase of a population per individual. Write your answers to the bolded questions on a separate sheet of paper. The intrinsic rate of population growth, denoted as r m (Caughley & Birch 1971) and b shows that the maximum per capita growth rate is reached at a low population size, after which an Allee effect comes into play and the per capita growth rate abruptly declines and can become negative at very low population size