Terminal Value Calculator

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Terminal Value represents the estimated value of a business beyond the explicit forecast period in a valuation model, capturing the majority of long-term value. More info →

Input

Method

Final Year Cash Flow

Perpetual Growth Rate (%)

WACC / Ke (%)

Approach

EBITDA / Revenue

EV Multiple

Net Profit

P/E Multiple

Select a method and enter values.

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How This Calculator Works

A valuation model forecasts cash flows for a few years, but a business keeps running after that. Terminal value is the value of all those later years, rolled into one number at the end of the forecast. You can estimate it by assuming steady growth forever, or by applying a market multiple.

The Formulas

Perpetual Growth: TV = Final Year Cash Flow × (1 + g) ÷ (WACC − g)
Exit Multiple (FCFF): TV = EBITDA × EV Multiple
Exit Multiple (FCFE): TV = Net Profit × P/E Multiple

g = perpetual growth rate · WACC / Ke = discount rate, which must be higher than g

What Each Input Does

Method: Perpetual Growth – assumes cash flow grows at a steady rate forever.
Exit Multiple – assumes the business could be sold at a typical market multiple.
Final Year Cash Flow / Perpetual Growth Rate / WACC or Ke: The last forecast year's free cash flow, its long-run growth rate, and the discount rate. Use WACC for FCFF or Ke for FCFE.
Approach (Exit Multiple): FCFF uses EBITDA (or revenue) × an EV multiple. FCFE uses net profit × a P/E multiple.

Step by Step

Perpetual growth: the final cash flow is grown one year, then divided by (WACC − g).
Exit multiple: the chosen measure is multiplied by the multiple.
The result is rounded to 2 decimals.

Reading the Result

Terminal value – a value at the end of the forecast. Discount it back to today before adding it to your valuation.

Quick Example

Perpetual growth: final year cash flow 100,000, growth 3%, WACC 10%. TV = 103,000 ÷ 0.07 = 1,471,429.
Exit multiple: EBITDA 200,000 × EV multiple 8 = 1,600,000; or net profit 100,000 × P/E 15 = 1,500,000.