In a DCF valuation, what does the terminal value represent?
- A The value of assets at liquidation
- B The value of all cash flows beyond the explicit forecast period
- C The initial investment required
- D The total debt outstanding
Answer
The value of all cash flows beyond the explicit forecast period
Terminal value often accounts for the majority of a DCF valuation, which is why the growth rate and exit multiple assumptions behind it deserve careful scrutiny.





