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Terminal Value, Gordon Growth
Calculates a Gordon growth terminal value, its present value, and the resulting enterprise value alongside the explicit-period cash flows. Inputs are the final-year free cash flow, the WACC, the perpetuity growth rate, and the length of the explicit forecast period.
By Devon Coombs, CPA, MBA · Teaching Professor of Finance, Santa Clara University · Reviewed August 2026
From the author: Devon Coombs, CPA, MBA teaches finance at Santa Clara University and works with corporate teams on practical AI.
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Terminal Value, Gordon Growth
Terminal value (Year n)
$127.5M
FCF × (1+g) / (WACC−g)
TV as % of EV
69%
the tail that wags the dog
PV of terminal value
$79.2M
discounted to today
Enterprise value
$114.2M
explicit PV + PV(TV)
Terminal value is usually 60–80% of enterprise value, so g and WACC dominate the answer. A single point of g swings TV about 15%, always present it as a sensitivity table over WACC and g.
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Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.