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Terminal Value🔵 Intermediate

What Is a Business Worth Beyond the Next Few Years?

What Is the Business Worth Beyond Year 10?

Terminal value captures the value of all cash flows beyond your explicit forecast period. It typically drives 60–80% of DCF value — getting it right is critical.

Terminal ValueGordon GrowthStable GrowthPerpetuity

Live Result

$3,433.33

ƒ: FCFF_last * (1 + g) / (WACC - g)raw: 3433.33

ƒ(x)

Use variable names from the panel above (e.g. FV, r, n) — or type numbers directly: 10000 / (1 + 0.08)^10

FCFF_last$

Free cash flow in the final explicit forecast year

FCFF_last = 200

g% as decimal

Stable perpetual growth rate (must be < WACC)

g = 0.03

WACC% as decimal

Weighted average cost of capital

WACC = 0.09

💡 You can also enter values directly in the formula: 10000 / (1 + 0.08)^10

⬇ Export Calculation

Exports a plain .txt file with your expression, formula, all variable values, result, and educational notes — ready to paste into any report, Word doc, Notion, or Google Docs.

The exported file includes the formula in standard mathematical notation — you can paste it directly into Excel, Google Sheets, or back into FinanceSheep.

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Learn: What Is the Business Worth Beyond Year 10?

Terminal Value · Educational Guide

The Core Idea

You can't forecast a business forever in detail. So at year 10 (or year 5 or year 15), you assume the company enters a "stable phase" and keeps growing at a modest, constant rate forever. That's terminal value.

How It Works

Terminal Value = FCFF_next_year / (WACC − g). This is the Gordon Growth Model. The key constraint: g must be ≤ long-run economic growth (~2–3%). If g exceeds GDP growth, the company eventually becomes larger than the whole economy — impossible.

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Real-World Example: Final year FCFF = $200M. Stable growth g = 3%, WACC = 9%: TV = 200 × 1.03 / (0.09 − 0.03) = 206 / 0.06 = $3,433M. Now discount back: if this is Year 10, PV = 3,433 / (1.09)^10 = $1,450M.

What Is a Business Worth Beyond the Next Few Years?

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