Terminal Value
Also called: TV, continuing value, exit multiple method
Terminal value captures everything a business earns beyond the explicit forecast, and it routinely accounts for 60–80% of a DCF's total value. That concentration is the method's weak point: most of the answer comes from a single assumption about perpetual growth or an exit multiple, applied to a year nobody can forecast. Perpetual growth above long-run GDP growth is the most common and least defensible input.
Formula
Terminal value = Final year FCF × (1 + g) ÷ (WACC − g)
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