Question

You project cash flow in year 6, the terminal year, to be $15,000,000. Using a discount...

You project cash flow in year 6, the terminal year, to be $15,000,000. Using a discount rate of 30% and an assumed growth rate of 5%, calculate the terminal value and the present value of that amount.

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Answer #1

Terminal Value can be calculated using:

We need to compute the PV of this

60,000,000 = PV * (1 + 30%)5

60,000,000 = PV * 3.71293

PV = $16,159,744.46

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