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Terminal Value CalculatorDCF / Gordon Growth / Exit Multiple
Methodology

How this calculator decides what to compute and what to cite

This methodology page is the citable anchor for every number on this site. Every formula, every benchmark, every illustrative range traces back to a source listed here. Last verified 2026-06-17.

Editorial principle
Every numeric claim on this site traces to either (a) a public URL fetched from a primary source listed in src/data/sources.json with an edition month and verification date, or (b) a derivation from a named textbook with chapter reference. Worked examples use clearly-fictional company names and are labelled illustrative. No vendor data, no affiliate links, no email capture, no demo.
Formulas computed

What the calculator computes, line by line

Gordon Growth terminal value
TVn = FCFn * (1 + g) / (WACC - g), valid for g < WACC
Gordon Growth present value
PV(TV) = TVn / (1 + WACC)n
Exit multiple terminal value
TVn = EBITDAn * (EV / EBITDA)exit
Implied perpetuity growth (back-solve)
gimplied = (TV * WACC - FCFn) / (TV + FCFn)
Divergence between methods
diff = (TVexit - TVgordon) / TVgordon

All formulas are implemented in src/lib/calculate.ts with the same notation used above.

Source registry

15 primary sources, each with edition + URL + verification date

The complete source list is also published as JSON at /sources for machine consumption.

Cost of Capital by Industry (US): January 2026 Update
Aswath Damodaran, NYU Stern School of Business
Edition: January 2026Verified: 2026-06-17Risk: low
Use for: Industry-level WACC benchmarks (e.g. software systems and applications, semiconductors, retail food)
ID: damodaran-wacc-by-industry-jan2026
EV / EBITDA Multiples by Industry (US): January 2026 Update
Aswath Damodaran, NYU Stern School of Business
Edition: January 2026Verified: 2026-06-17Risk: low
Use for: Industry-level EV/EBITDA exit-multiple benchmarks
ID: damodaran-ev-ebitda-by-industry-jan2026
Levered and Unlevered Betas by Industry (US): January 2026 Update
Aswath Damodaran, NYU Stern School of Business
Edition: January 2026Verified: 2026-06-17Risk: low
Use for: Industry beta inputs to CAPM cost-of-equity used in WACC build-up
ID: damodaran-betas-by-industry-jan2026
Implied Equity Risk Premiums: Monthly Estimates, January 2026
Aswath Damodaran, NYU Stern School of Business
Edition: January 2026 monthly updateVerified: 2026-06-17Risk: low
Use for: Equity risk premium input to CAPM. Damodaran publishes monthly updates; we cite the most recent January annual release
ID: damodaran-erp-jan2026
Investment Valuation, 3rd Edition
Aswath Damodaran. John Wiley & Sons, 2012
Edition: 3rd edition, 2012Verified: 2026-06-17Risk: low
Use for: Derivation of Gordon Growth Model from constant-growth perpetuity (Chapter 12), two-stage and H-model presentations (Chapters 13-14), CAPM treatment (Chapter 7)
ID: damodaran-investment-valuation-3e
Valuation: Measuring and Managing the Value of Companies, 7th Edition
Tim Koller, Marc Goedhart, David Wessels (McKinsey). John Wiley & Sons, 2020
Edition: 7th edition, 2020Verified: 2026-06-17Risk: low
Use for: Key-value driver formula for terminal value (Chapter 11), sanity checks on perpetuity growth rate, mid-year convention treatment (Chapter 8)
ID: koller-valuation-7e
Edition: 2024 curriculumVerified: 2026-06-17Risk: low
Use for: Standard treatment of two-stage and H-model terminal value variants; CAPM derivation; free-cash-flow definitions (FCFF vs FCFE)
ID: cfa-equity-valuation-2024
Edition: Daily releaseVerified: 2026-06-17Risk: low
Use for: Risk-free rate input to CAPM cost-of-equity used in WACC. We do NOT print specific yields on this site as the value changes daily; we refer users to H.15 directly
ID: fed-h15-treasury
IMF World Economic Outlook, April 2026
International Monetary Fund
Edition: April 2026 releaseVerified: 2026-06-17Risk: low
Use for: Long-run nominal GDP growth anchors for perpetuity growth-rate sanity checks
ID: imf-weo-april-2026
Edition: First estimate, Q1 2026Verified: 2026-06-17Risk: low
Use for: US nominal GDP growth reference for perpetuity-growth ceiling
ID: bea-gdp-q1-2026
Valuation, 7th Edition, Chapter 8: Frameworks for Valuation
Tim Koller, Marc Goedhart, David Wessels (McKinsey). John Wiley & Sons, 2020
Edition: 7th edition, 2020, Chapter 8Verified: 2026-06-17Risk: low
Use for: Mid-year convention adjustment for cash flow timing in DCF
ID: koller-mid-year-convention
Investment Banking: Valuation, LBOs, M&A, and IPOs, 3rd Edition
Joshua Rosenbaum and Joshua Pearl. John Wiley & Sons, 2020
Edition: 3rd edition, 2020Verified: 2026-06-17Risk: low
Use for: LBO modelling, exit multiple selection discipline, M&A terminal value mechanics, comparable companies analysis
ID: rosenbaum-pearl-ibd-3e
Corporate Finance, 5th Edition
Jonathan Berk and Peter DeMarzo. Pearson, 2019
Edition: 5th edition, 2019Verified: 2026-06-17Risk: low
Use for: WACC formula, CAPM cost of equity, free cash flow construction, sensitivity analysis treatment
ID: berk-demarzo-corporate-finance-5e
Growth and Value: Past Growth, Future Growth and Their Relationship
Aswath Damodaran, NYU Stern School of Business
Edition: Working paper series, updates through 2024Verified: 2026-06-17Risk: low
Use for: Fade-period treatment between high-growth and stable-growth phases
ID: damodaran-fade-rate
Edition: 2024 curriculum, Equity reading on FCFF / FCFEVerified: 2026-06-17Risk: low
Use for: Definitions of FCFF and FCFE and the bridge from EBITDA to FCFF
ID: cfa-fcff-fcfe
Editorial rules

Five rules every page on this site follows

  1. 1No numeric claim without a source URL. Vendor pricing pages, named datasets, or named textbooks with chapter reference. If neither is available, the claim is removed.
  2. 2Industry benchmarks cite the Damodaran NYU Stern dataset with the January annual edition explicit. The Damodaran site is updated each January; older editions remain accessible via the Data Archives link.
  3. 3Worked examples use clearly-fictional company names (Acme SaaS Co., Hilltop Industrial Inc.) and are labelled 'Illustrative example, not a real company. Numbers chosen to demonstrate methodology.'
  4. 4Every page footer carries a 'Last verified [Month Year]' stamp with the honest verification date.
  5. 5No em-dashes, no smart quotes in formula text. Pure ASCII so source-view copy-paste round-trips cleanly.
Verifier: Oliver Wakefield-Smith, Digital Signet. Last full source audit: 2026-06-17. To flag a stale or incorrect source, email [email protected].