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Terminal value discounting
Hi guys, I have been doing some preps on the DCM, and can't rub my head around why TV is discounted a year less than the year we calculate it in. So the PV formula for terminal value in year 5 would be: FCF*(1+g)/(WACC-g) and then multiplied by discounted factor of 1/(1+wacc)^5. So in essence, first...
Exit multiple / Terminal Value for Operating Solar Project
Hi all, I'm being asked to model the levered and unlevered returns for a Greenfield solar project in LatAm. The project life IRR is easy of course, but I don't know what you all might recommend for how PE funds would look at a project like this in terms of exit multiples - the asset would be fully...
Quarterly DCF & Terminal Value
I'm building a quarterly DCF model. Obviously in this case the terminal period of the model is a quarter and not a year. When calculating the terminal value should i be multiply the final quarter by 4?
Terminal Value and Cash Build-up
Question - If I am running a 15 year buy and hold scenario on a project, so no terminal value / multiple, would I pay out the cash build-up the project creates at exit or would I just assume that cash is recycled in the business and invested in other projects? Obv. when I run economics with a TV the...
Calculating IRR of cash flows with terminal value
I have a project with an initial outlay (Year 0) and 10 years of forecasted positive FCFFs and FCFEs. After 10 years, I use a Gordon/Perpetuity Growth Model to determine Terminal Value. I built DCF model and discounted FCFFs with WACC (to arrive at Enterprise Value) and FCFEs with Cost of Equity (to...
Terminal Value too High; What to do?
My terminal value / ev is 90%. What should I look at to find out what I did wrong?
Terminal Value for IRR Calculation - Restaurant Franchise
I am calculating IRR from a 10 years projected cash flow + a terminal value. The terminal value I understand is usually calculated as FCFF(1+g)/(r-g). Incase of using terminal value for IRR calcuation should the r= cost of capital or r=IRR (in this case it will be iterative as its being used to...
Terminal Value for IRR Calculation
I am calculating IRR from a 10 years projected cash flow + a terminal value. The terminal value I understand is usually calculated as FCFF(1+g)/(r-g). Incase of using terminal value for IRR calcuation should the r= cost of capital or r=IRR (in this case it will be iterative as its being used to...
How to calculate terminal value for a dividend discount model?
I really can't figure this out. I'm trying to learn the basics of how to do a DDM. M&I says to calculate your TV based on P/E and EPS in the final year and then discount that. But it's so vague. How would you be using P/E and EPS to calculate your terminal value? I mean, what do you do with them?
Terminal Value Questions
1) What happens if you have a negative growth rate in your terminal value calculation and how does it effect terminal value and EV ? 2) What does a negative terminal value mean? can you have it?
The growing perpetuity calculation in DCF
Hey, guys. I am a pre-MBA student. I studied one corporate finance class in law school so my question may seem too plain and simple. I was reading the DCF and noted that the calculation of the terminal value is different from the formula I learned from class. The formula taught in our class is to...
Terminal value calculation
Hi guys, I would need some help please, with the calculation of Terminal Value.. Sounds pretty basic I know, but this got pretty confusing in an interview .. Let's assume you project your FCFF over a period of 5 years, in year 5 you have FCFF of 350 let's say, a WACC of 10% .. that gives you 350/...
Change in NWC in Terminal Value
Hi, I was wondering how (or if) the change in NWC effects the Terminal Value. I understand that in a DCF NWC has a slightly different definition (does not include Cash and short term debt). When calculating TV I dont include D&A and Capex (becasue they should zero out in the long run) - but...
Terminal Value as % of Total Value
As a rule of thumb, What percentage should Terminal Value make up of the Total Value ? I seem to remember 70% from school, is that correct ?
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