What does terminal growth rate mean
Definition: Terminal value is the sum of all cash flows from an investment or project beyond a forecast period based on a specified rate of return. In other words, it’s the estimated value of an asset at maturity adjusted for interest rates and cash flows in today’s dollars. In finance, the terminal value (continuing value or horizon value) of a security is the present value at a future point in time of all future cash flows when we expect stable growth rate forever. It is most often used in multi-stage discounted cash flow analysis, and allows for the limitation of cash flow projections to a several-year period; see Forecast period (finance) .