What is a crucial assumption in the perpetuity growth model?

In the context of the perpetuity growth model, a fundamental assumption is that the growth rate remains constant indefinitely. This is essential because the model is designed to estimate the present value of cash flows that are expected to continue infinitely in the future, growing at a steady rate. If the growth rate were to fluctuate, it would undermine the model's premise since the valuation calculations rely on predicting future cash flows based on this consistent growth rate.

Other factors like decreasing revenue, fixed costs, or depreciation not being considered are not fundamental to the perpetuity growth model. Instead, these elements are usually analyzed separately or under different models if relevant, but they do not reflect the primary assumption that underpins the perpetual growth concept.