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.

Interactive Tool

Final-year FCF

WACC (discount rate)

Perpetuity growth (g)

Explicit period (years, n)

PV of explicit-period FCFs

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.

Learn the concept

This calculator comes from the free Entrepreneurial Finance course, where the concept is taught with readings, worked examples, and practice questions.

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Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.