Terminal Value Calculator

Terminal Value Calculator calculator can be used to estimate the terminal value of an investment based on a constant growth rate and the last year's cash flow.

Input Parameters

Calculation Results

Calculation Formula

Terminal Value = Last Year's Cash Flow * (1 + Growth Rate) / (Discount Rate - Growth Rate)

Where:
Last Year's Cash Flow: The cash flow generated in the last year of the forecast period.
Growth Rate: The constant growth rate expected in perpetuity.
Discount Rate: The rate used to discount future cash flows to their present value.

Result

$0.00

Terminal Value Calculator Calculator Usage Guide

Learn how to use the Terminal Value Calculator calculator and its working principles

How to Use the Terminal Value Calculator

  1. Enter the last year's cash flow in the first input field.
  2. Enter the constant growth rate as a percentage in the second input field.
  3. Enter the discount rate as a percentage in the third input field.
  4. Click the "Calculate" button to compute the terminal value.
  5. The result will be displayed in the result field.

Working Principle

The terminal value is the value of all future cash flows beyond the forecast period, assumed to grow at a constant rate. It is calculated using the perpetuity growth model, which assumes that the cash flows will grow at a constant rate indefinitely. The formula used is:

Terminal Value = Last Year's Cash Flow * (1 + Growth Rate) / (Discount Rate - Growth Rate)

This formula discounts the perpetuity back to its present value using the discount rate.