Cernarus

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.

Updated Nov 6, 2025

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

Updates as you type

Terminal value (at terminal year)

$12,750,000.00

Terminal value per share

$127.50

OutputValueUnit
Terminal value (at terminal year)$12,750,000.00currency
Terminal value per share$127.50currency
Primary result$12,750,000.00

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.

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.

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.

Further resources

External guidance

Expert Q&A

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