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The valuation is based on expected future cashflows. These
cashflows are discounted by a discount factor, which is made up from the
opportunity cost, the company risk and the market related risk
The risk free rate the opportunity cost, the market premium is the company
risk and Beta is the market related risk. This model uses the below formula
Net present value = (The sum of expected profits in years 1-5 + the constant
growth value of cashflows beyond year 5) all divided by the  Discount rate =
risk free rate + (company risk pemium + Beta)
The  Terminal Value also needs to be added.
Terminal value (TV) is the value beyond the forecasted period when future cash flows can be estimated. Terminal value assumes growth at a set growth rate forever after the forecast period.
Terminal Value (perpetual growth)
@ g =         10.0%
OR Terminal Value (other)
Free Cash Flows
0
Risk Free Rate 6.00%
Beta    3.00
Discount Rate: (%)   42.00%
Present Value: £3,319,789
394120  788000         1306840         1871840             2670320
Less tax at 20%
Net Income (£)       315,296  630,400         1,045,472      1,497,472      2,669,396
Terminal Value (Perpetual Growth)                                                      9176047
Free Cash Flows
315,296  630,400         1,045,472      1,497,472      11,845,443
Present Value: \$3,319,789
What Is Terminal Value (TV)?
Terminal value (TV) is the value of an asset, business, or project beyond the forecasted period when future cash flows can be estimated. Terminal value assumes a business will grow at a set growth rate forever after the forecast period. Terminal value often comprises a large percentage of the total assessed value.
KEY TAKEAWAYS
Terminal value (TV) determines a company’s value into perpetuity beyond a set forecast period—usually three to five years.
Analysts use the discounted cash flow model (DCF) to calculate the total value of a business. The forecast period and terminal value are both integral components of DCF.
The two most common methods for calculating terminal value are perpetual growth (Gordon Growth Model) and exit multiple.
The perpetual growth method assumes that a business will generate cash flows at a constant rate forever, while the exit multiple method assumes that a business will be sold.