Terminal value

The value of the cash flows beyond the forecast, usually most of a DCF and most of its risk.

• Valuation

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  Terminal value is usually most of the answer, and most of the risk

  Check what share of the value is terminal and what multiple the terminal assumptions imply; those two checks catch most broken DCFs.

  Any DCF review, any interview follow-up on the terminal growth rate, and any model where the answer seems too sensitive to the last year.

  From Session 9: Terminal Value · Aswath Damodaran (NYU Stern)