What is the value of the company? The stock price is currently $135 per share. Would you like to buy this stock? (the company's appropriate discount rate is 10%) A A terminal value is the value of a company in the final year of the forecast period It should be added 10 reflect the present value of alt cash flows occurring thereafter. Since it capitalizes all future cash flows beyond the final year, the terminal value can be a large component of the value of a company, and therefore deserves careful attention A standard estimator of the Terminal Value (TV) in the final year of cash-flow forecast is the constant-growth valuation approach The Free-cash-Flow value used in the constant-growth valuation approach should reflect the "steady state" cash flows for the year after the forecast period This assumption makes logical sense in that if a firm truly in steady state, all financial statement line items should by definition be growing at the same rate. Let's assume that growth rate of FCF is 2%, what is the TV of the firm at time t = 4? With steady state growth rate of 2% would you like to but this company? Let's assume that growth rate of FCF is 5%, what is the TV of the firm at time t = 4? With steady state growth rate of 5% would you like to but this company