I am struggling with understanding how TV is calculated with the exit multiple vs gordon growth method, and I hope someone can help.
Assuming I have projected out FCF for year 1 to 5, the Exit multiple method suggests to take the FCF (or EBITDA or EXIT) of year 5 and multiply it with a corresponding multiple of comparable companies. The Gordon Growth method suggests to take the FCF for year 6 and divide it by (r-g)^6.
Why does the "n" of the numerator differ for both methods? Why do we use FCF (n+5) for Exiting multiple and FCF (n+6) for Gordon Growth?