Terminal Value

Terminal Value or TV is the value of any investment at the end of the investment period. This will usually assume a constant interest rate for the period.

The calculation for Terminal Value is as follows:

• Principal / (1 + Interest Rate)^Time

Terminal Value is used to calculate what the final outcome of an investment will be and how much it will be worth.

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

• Retained Earnings
• Fraud Triangle
• Accounts Receivable Turnover Ratio
• Marginal Cost Formula
• Nash Equilibrium