What is Terminal Value?
Terminal Value The estimated value of an asset, business, or project at the end of a forecast period, based on a perpetuity growth model or exit multiple. Used in discounted cash flow (DCF) and valuation models.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Terminal Value” Used in Practice?
Terminal value often represents a significant portion of total enterprise value in DCF models for business valuation.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Terminal Value?
The estimated value of an asset, business, or project at the end of a forecast period, based on a perpetuity growth model or exit multiple. Used in discounted cash flow (DCF) and valuation models.
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