The Value Growth Duration Method enables you to assume that the post-investment cash flows that the stakeholders receive increase at a specified growth rate for a specified number of years. Thus, it explicitly assumes that value creation occurs after the forecast period but not indefinitely -- an assumption many investors consider reasonable. What is unclear for this method is how to estimate that growth rate, especially given that it needs to take investment into account, and the length of time horizon for value-creating growth.
The Value Growth Duration Method starts with the formula for a Growing Perpetuity of one dollar in Arrears: (1 + g) / (K - g)
However, Strategic Finance assumes the time horizon is limited to a fixed number of years. Thus, in the Nth year, at the end of the Value Growth Duration, Strategic Finance converts from a Growing Perpetuity to a simple Perpetuity.