What growth rate should I use for terminal value?

The terminal growth rate should approximate long-run nominal GDP growth (2-3%). Using a rate above long-run GDP growth implies the company eventually grows larger than the economy.

Why does terminal value dominate DCF value?

Terminal value represents all cash flows from the final projection year to infinity, discounted back. Even with only 5 projection years, terminal value often accounts for 70-80% of total value.

What is the exit multiple method vs Gordon Growth for terminal value?

Exit multiple assumes the company is sold at a specific EV/EBITDA multiple at the projection end. Gordon Growth assumes perpetual growth. Cross-check both methods for consistency.

DCF Terminal Value Calculator Gordon Growth

Calculate DCF terminal value using the Gordon Growth Model: TV = FCFn x (1+g) / (WACC - g). Terminal value typically represents 60-80% of total DCF enterprise value.

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DCF Terminal Value Calculator Gordon Growth

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Frequently Asked Questions

What growth rate should I use for terminal value?

Why does terminal value dominate DCF value?

What is the exit multiple method vs Gordon Growth for terminal value?