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Terminal Value Calculator | Gordon growth terminal value

Estimate a company's terminal value with the Gordon growth model from its final cash flow, perpetual growth rate and discount rate, with the r > g condition enforced. The majority of any DCF valuation — essential for finance coursework and analysis.

Last updated: June 2026 · Free · No sign-up required

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Results

Enter values above and click Calculate to see your result instantly.

How the Terminal Value Calculator works

Every result on this page comes from a real formula — TV = FCF × (1 + g) ÷ (r − g), requires r > g — computed live in your browser the moment you press the button.

For context, the sections beneath the calculator include typical values, a worked example you can recompute by hand, and an FAQ covering the practical details of terminal value calculator.

Quick reference

FCF $1M, r = 9%gTerminal value
1%$12.63M
2%$14.57M
2.5%$15.77M
3%$17.17M

info Terminal Value Calculator

Free math calculator — enter your numbers and get an instant, accurate result.

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Everything runs locally in your browser. No uploads, no accounts, no tracking.

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info Educational

Includes the formula and step-by-step explanation so you understand the math, not just the answer.

Interpretation guide

CheckGuideline
g vs GDPKeep g ≤ long-run nominal GDP growth (~2–3%)
r − g spreadSmall spreads inflate TV — sanity-check under 4%
TV share of DCFOften 60–80% of total value — sensitivity-test g and r

lightbulb Worked example

Let's say you are using the Terminal Value Calculator. Calculates terminal value using TV = FCF × (1 + g) ÷ (r − g), requires r > g, instantly in your browser. Enter the values that match your situation into the input fields and press calculate — using realistic numbers makes the result directly useful for you.

Result: The calculator instantly applies the formula TV = FCF × (1 + g) ÷ (r − g), requires r > g and returns the result with appropriate precision.

What this means: Read the result in the context of what you are measuring. The step-by-step breakdown lets you confirm the math and understand which input most affects the outcome.

Formula & methodology

Formula: TV = FCF × (1 + g) ÷ (r − g), requires r > g

The Terminal Value Calculator is built on a well-established calculation method. It uses the formula TV = FCF × (1 + g) ÷ (r − g), requires r > g to turn your inputs into a reliable result. Calculates terminal value using TV = FCF × (1 + g) ÷ (r − g), requires r > g, instantly in your browser. The steps are shown on the page so you can follow the reasoning from input to output.

  1. Enter the final forecast-year free cash flow.
  2. Enter the perpetual growth rate g (conservative: at or below GDP growth).
  3. Enter the discount rate r (usually WACC); the tool computes FCF×(1+g)÷(r−g).
  4. Remember to discount this TV back to present value before adding it to your DCF.

Example: $1M FCF growing 2.5% forever at a 9% WACC → TV = $1.025M ÷ 6.5% = $15.77M at the horizon.

Authoritative source: Wolfram MathWorld

Frequently asked questions

What is terminal value?
The Terminal Value Calculator is free, private, and accurate: it runs entirely in your browser (no uploads, no accounts), applies the standard calculation, and explains each step so you can verify the result. Calculates terminal value using TV = FCF × (1 + g) ÷ (r − g), requires r > g, instantly in your browser. There is no limit on usage, and it works on any device.
What growth rate should I use?
Use a perpetual growth rate that is conservative and sustainable — typically 2–3% for mature economies, roughly tracking long-run GDP or inflation growth. The terminal value is highly sensitive to g: raising it from 2% to 3% can increase the terminal value by 20% or more. Never use a growth rate at or above the discount rate, which breaks the formula.
Why must r be greater than g?
The Gordon growth formula TV = FCF × (1 + g) ÷ (r − g) divides by (r − g). If g equals r, the denominator is zero and the value is infinite — a company growing forever at the discount rate would be worth everything. If g exceeds r, the formula returns a negative, nonsensical value. The condition r > g ensures a finite, positive terminal value.
Is the result today’s value?
The terminal value is the value at the END of the explicit forecast period, not today. To use it in a DCF valuation, you must discount it back to the present along with the projected cash flows. The calculator returns the terminal value at the forecast horizon; discount it by (1 + r)^n where n is the number of years to the horizon.
What about the exit multiple method?
The Terminal Value Calculator uses the standard TV = FCF × (1 + g) ÷ (r − g), requires r > g. You enter your values, and the calculator applies the formula step by step, showing the working so you can verify the math and understand how the result is derived rather than trusting a black box.
What does the Terminal Value Calculator do?
Calculates terminal value using TV = FCF × (1 + g) ÷ (r − g), requires r > g, instantly in your browser. The calculator takes your inputs, applies the standard calculation, and returns a clear result so you can make an informed decision without doing the math by hand.
What formula does the Terminal Value Calculator use?
It uses the Gordon growth model: TV = FCF × (1 + g) ÷ (r − g), where FCF is the final free cash flow, g the perpetual growth rate, and r the discount rate — and it requires r > g. Enter the values and the tool returns the terminal value, which usually makes up the majority of a discounted cash flow valuation.
Is the Terminal Value Calculator free and private?
Yes — the Terminal Value Calculator. There is no sign-up, no paywall, no trial, and no limit on how many calculations you can run. CalcaTools covers its costs with non-intrusive display advertising, so the calculator itself never asks for payment or restricts any feature.
How accurate is the Terminal Value Calculator?
The Terminal Value Calculator applies the standard formula: TV = FCF × (1 + g) ÷ (r − g), requires r > g. It is tested against published worked examples before launch and uses native double-precision arithmetic, so results are accurate to typical precision for the values you enter — with no intermediate rounding that could distort the answer.

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