Valuation

Terminal Value

Definition

What is Terminal Value?

The estimated value of cash flows beyond an explicit forecast period.

Example in practice

Most of the DCF value comes from operations after year five.

Keep learning

The price at which an asset could trade in the market at a given time.

An estimate of an asset's underlying economic worth based on expected cash flows, assets, or earning power.

An estimate of an asset's appropriate value under specified assumptions or accounting standards.

Present value of expected cash inflows minus present value of expected cash outflows.

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