# Terminal Value

*Corporate Finance & M&A — Finicade finance glossary*

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)`

**Also known as:** TV, continuing value, exit multiple method

**Related terms:** [Discounted Cash Flow (DCF)](https://finicade.com/glossary/dcf), [NPV (Net Present Value)](https://finicade.com/glossary/npv), [Perpetuity](https://finicade.com/glossary/perpetuity), [WACC](https://finicade.com/glossary/wacc), [Valuation Multiple](https://finicade.com/glossary/valuation-multiple)

Source: https://finicade.com/glossary/terminal-value