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 calculate IRR itself). Please let me know the usual practice. Thanks.
| +87 | Bathroom War Crimes | 22 | 10h |
| +56 | for you youngins (under 40, ideally under 30), what do you want out of life? | 34 | 53m |
| +41 | We all should've gotten in tech | 28 | 7s |
| +29 | Stealth-Listening Devices | 8 | 13h |
| +13 | Totally random question | 6 | 20h |
| +12 | Companies with products that track terminal/analytics desktop usage | 1 | 3d |
| +12 | Pickleball Manhattan | 4 | 16h |
| +9 | Ordering Valium Online: Key Considerations | 0 | 3d |
| +8 | LinkedIn Shitposts | 3 | 2d |
| +7 | my advisor looks a little too good | 7 | 2d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Just use a firm-specific discount rate. But if this is for an LBO standard practice is to use a multiple - i.e. assuming you exit the investment in a certain year.
I have generally used the cost of equity (for basic company valuation), as opposed to WACC, as FCF in this situation is the FCF available to equity holders. Use a multiple if you're doing an LBO.
Consectetur et soluta in molestiae atque eum ullam. Eum quo consequatur veniam et soluta in doloremque. Libero blanditiis sequi consectetur incidunt facilis et. Libero velit harum placeat earum. Dignissimos molestiae architecto accusantium dolores dolor.
Sint expedita earum porro magnam quibusdam. Maxime rem pariatur incidunt commodi soluta totam praesentium deleniti. Adipisci aut maiores perferendis quia iste.
Enim ipsum architecto omnis. Exercitationem est et voluptatem laborum. Commodi deleniti nemo asperiores aliquid nam quia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...