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Financial Modeling
Unit 1
Discounted Cash Flow (DCF)
Understanding DCF Fundamentals
Calculating Free Cash Flows
Discount Rate and Terminal Value
Forecasting Cash Flows
Sensitivity Analysis and Valuation
Unit 2
LBO
Introduction to LBOs
LBO Modeling Process
LBO Valuation and Analysis
LBO Deal Structuring
LBO Case Studies
Unit 1 • Chapter 3
Discount Rate and Terminal Value
Summary
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Concept Check
What is the formula for calculating Terminal Value in Discounted Cash Flow analysis?
Terminal Value = FCF / (1 + g)
Terminal Value = FCF / (r - g)
Terminal Value = FCF * (1 + g)
Terminal Value = (FCF * (1 + g)) / (r - g)
How does the Discount Rate (r) impact the Terminal Value in DCF analysis?
Higher r leads to lower Terminal Value
Higher r leads to higher Terminal Value
r has no impact on Terminal Value
r negatively affects growth rate g
Check Answer
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Calculating Free Cash Flows
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Forecasting Cash Flows