Terminal Value Calculator
This calculator provides two standard approaches to estimate terminal value in discounted cash flow analysis: the perpetuity (Gordon Growth) method and an exit multiple method. Use the Gordon Growth when a stable long-term growth rate is a reasonable assumption; use the exit multiple when comparable-company multiples are available and applicable.
Inputs expect decimals for rates (for example, enter 10% as 0.10 and 2% as 0.02). Results show terminal value at the end of the projection period (undiscounted) and a per-share equivalent when shares outstanding is provided.
Governance
Record fa1a1eecab98 • Reviewed by Fidamen Standards Committee
Terminal value calculated by capitalizing the final forecast cash flow with a perpetual growth rate: TV = FCF_last × (1 + g) / (WACC − g). Use when long-term cash flows are expected to grow at a stable rate.
Inputs
Results
Terminal value (at terminal year)
$12,750,000.00
Terminal value per share
$127.50
| Output | Value | Unit |
|---|---|---|
| Terminal value (at terminal year) | $12,750,000.00 | USD |
| Terminal value per share | $127.50 | USD |
Visualization
Methodology
Perpetuity (Gordon Growth): Terminal value capitalizes the final projected cash flow using a perpetual growth rate. Formula: TV equals final-period free cash flow times (1 + growth) divided by (discount rate minus growth). This assumes the company can sustain a constant growth rate into perpetuity and that the discount rate exceeds the growth rate.
Exit Multiple: Terminal value equals a chosen performance metric in the terminal year (commonly EBITDA) multiplied by an empirically derived exit multiple. Select the multiple based on a robust comparable-company analysis and adjust for differences in scale, growth, and risk.
Calibration and stress-testing: Always test multiple reasonable scenarios for WACC, growth, and exit multiples. Small changes in WACC − g materially affect perpetuity TV. Provide low/central/high cases and document the rationale for chosen parameters.
Key takeaways
This calculator supports two widely used terminal value approaches, shows per-share equivalents, and emphasizes careful calibration of WACC, growth, and multiples.
Always run sensitivity tests and document the assumptions, and remember that small parameter changes can produce large valuation shifts. Use external governance and data-handling best practices in line with NIST, ISO, and IEEE guidance when storing or sharing valuation data.
Worked examples
Example 1 (Gordon): Final FCF = 1,000,000; WACC = 0.10; g = 0.02 → TV = 1,000,000 × 1.02 / (0.10 − 0.02) = 12,750,000; TV per share (100,000 shares) = 127.50.
Example 2 (Multiple): Final EBITDA = 2,000,000; Exit multiple = 7.5 → TV = 2,000,000 × 7.5 = 15,000,000; TV per share (100,000 shares) = 150.00.
F.A.Q.
Should I enter rates as percentages or decimals?
Enter rates as decimals: for example, 8% = 0.08. The calculator treats inputs numerically; entering 8 will be interpreted as 8.0 and yield incorrect results.
What if WACC is equal to or less than the growth rate?
If WACC ≤ g the Gordon Growth formula is invalid and will produce nonsensical or infinite results. Use alternative approaches (exit multiple) or revisit assumptions about risk and long-term growth.
When is the exit multiple method preferred?
Use exit multiples when there is a credible set of comparables and consensus around multiples for similar businesses and when the final-year performance metric is reliable and representative.
Does the calculator discount the terminal value back to present value?
This tool reports terminal value at the terminal year (undiscounted). To obtain present value, discount the terminal value by the cumulative discount factors from your projection period to today using your model's discounting schedule.
How should I document assumptions and uncertainty?
Document data sources, comparable selection, and sensitivity ranges. Provide low/central/high scenarios for WACC, growth, and multiples. Record why a chosen long-term growth rate is credible given macroeconomic and industry constraints.
Sources & citations
- NIST (National Institute of Standards & Technology) — https://www.nist.gov
- ISO (International Organization for Standardization) — https://www.iso.org
- IEEE (Institute of Electrical and Electronics Engineers) standards repository — https://www.ieee.org
- OSHA (Occupational Safety and Health Administration) — https://www.osha.gov
- CFA Institute — Equity Valuation Standards — https://rpc.cfainstitute.org/
- FASB ASC 820 — Fair Value Measurement — https://www.fasb.org/
- AICPA — Valuation Services — https://www.aicpa-cima.com/
Further resources
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
Record ID: fa1a1eecab98What changed (latest)
v1.0.0 • 2025-11-06 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
What changed (latest)
v1.0.0 • 2025-11-06 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Engine
v1.0.0
Data
Baseline (no external datasets)
Content
v1.0.0
UI
v1.0.0
Governance
Last updated: Nov 6, 2025
Reviewed by: Fidamen Standards Committee (Review board)
Credentials: Internal QA
Risk level: low
Reviewer profile (entity)
Fidamen Standards Committee
Review board
Internal QA
Entity ID: https://fidamen.com/reviewers/fidamen-standards-committee#person
Semantic versioning
- MAJOR: Calculation outputs can change for the same inputs (formula, rounding policy, assumptions).
- MINOR: New features or fields that do not change existing outputs for the same inputs.
- PATCH: Bug fixes, copy edits, or accessibility changes that do not change intended outputs except for previously incorrect cases.
Review protocol
- Verify formulas and unit definitions against primary standards or datasets.
- Run golden-case regression suite and edge-case suite.
- Record reviewer sign-off with credentials and scope.
- Document assumptions, limitations, and jurisdiction applicability.
Assumptions & limitations
- Uses exact unit definitions from the Fidamen conversion library.
- Internal calculations use double precision; display rounding follows the unit's configured decimal places.
- Not a substitute for calibrated instruments in regulated contexts.
- Jurisdiction-specific rules may require official guidance.
Change log
v1.0.0 • 2025-11-06 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Areas: engine, content, ui • Reviewer: Fidamen Standards Committee • Entry ID: c11b576c93b3