The worth of an asset, business, or project beyond the anticipated time when future cash flows may be estimated is known as terminal value (TV). The term “terminal value” refers to the assumption that a company will continue to expand at a constant pace after the projection period has ended. The terminal value often accounts for a significant portion of the entire assessed value.
The perpetual growth approach implies that a company will create cash flows at a constant pace indefinitely, whereas the exit multiple methods believe that a company will be sold for a multiple of a market indicator.