Terminal Value using Exit Multiple Method Calculator

✖EBITDA at Last Period refers to the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) figure for the most recent financial reporting period.ⓘ EBITDA at Last Period [EBITDA_n+1]			+10% -10%
✖Exit Multiple is a valuation metric used in finance to estimate the value of a company or an asset at the end of a certain period.ⓘ Exit Multiple [EM]			+10% -10%

✖Terminal Value represents the value of a project or investment at the end of a specific period, typically when explicit cash flow projections end.ⓘ Terminal Value using Exit Multiple Method [TV]

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Formula

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Terminal Value using Exit Multiple Method

Formula

`"TV" = "EBITDA"_{"n+1"}*"EM"`

Example

`"10150"="1015"*"10"`

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Terminal Value using Exit Multiple Method Solution

STEP 0: Pre-Calculation Summary

Formula Used

Terminal Value = EBITDA at Last Period*Exit Multiple
TV = EBITDA_n+1*EM
This formula uses 3 Variables

Variables Used

Terminal Value - Terminal Value represents the value of a project or investment at the end of a specific period, typically when explicit cash flow projections end.
EBITDA at Last Period - EBITDA at Last Period refers to the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) figure for the most recent financial reporting period.
Exit Multiple - Exit Multiple is a valuation metric used in finance to estimate the value of a company or an asset at the end of a certain period.

STEP 1: Convert Input(s) to Base Unit

EBITDA at Last Period: 1015 --> No Conversion Required
Exit Multiple: 10 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

TV = EBITDA_n+1*EM --> 1015*10

Evaluating ... ...

TV = 10150

STEP 3: Convert Result to Output's Unit

10150 --> No Conversion Required

FINAL ANSWER

10150 <-- Terminal Value

(Calculation completed in 00.005 seconds)

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Created by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

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Satyawati College (DU), New Delhi

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< 18 Capital Budgeting Calculators

Overall Cost of Capital

Go Overall Cost of Capital = (Market Value of the Firm’s Equity)/(Market Value of the Firm’s Equity+Market Value of the Firm’s Debt)*Required Rate of Return+(Market Value of the Firm’s Debt)/(Market Value of the Firm’s Equity+Market Value of the Firm’s Debt)*Cost of Debt*(1-Tax Rate)

Discounted Payback Period

Go Discounted Payback Period = ln(1/(1-((Initial Investment*Discount Rate)/Periodic Cash Flow)))/ln(1+Discount Rate)

Net Present Value (NPV) for even cash flow

Go Net Present Value (NPV) = Expected Cash Flow*((1-(1+Rate of Return)^-Number of Periods)/Rate of Return)-Initial Investment

Capital Asset Pricing Model

Go Expected Return on Investment = Risk Free Rate+Beta on Investment*(Expected Return on Market Portfolio-Risk Free Rate)

Double Declining Balance Method

Go Depreciation Expense = (((Purchase Cost-Salvage Value)/Useful Life Assumption)*2)*Beginning PP&E Book Value

Modified Internal Rate of Return

Go Modified Internal Rate of Return = 3*((Present Value/Cash Outlay)^(1/Number of Years)*(1+Interest)-1)

Cost of Retained Earnings

Go Cost of Retained Earnings = (Dividend/Current Stock Price)+Growth Rate

After-Tax Cost of Debt

Go After Tax Cost of Debt = (Risk Free Rate+Credit Spread)*(1-Tax Rate)

Beginning Inventory

Go Beginning Inventory = Cost of Goods Sold-Purchases+Ending Inventory

Terminal Value using Perpetuity Method

Go Terminal Value = Free Cash Flow/(Discount Rate-Growth Rate)

Trade Discount

Go Trade Discount = multi(List Price,Trade Discount Rate)

Expected Monetary Value

Go Expected Monetary Value = multi(Probability,Impact)

Accounting Rate of Return

Go Accounting Rate of Return = (Average Annual Profit/Initial Investment)*100

Inventory Carrying Cost

Go Inventory Carrying Cost = (Total Carrying Cost/Total Inventory Value)*100

Certainty Equivalent Cashflow

Go Certainty Equivalent Cashflow = Expected Cash Flow/(1+Risk Premium)

Payback Period

Go Payback Period = Initial Investment/Cashflow per Period

Terminal Value using Exit Multiple Method

Go Terminal Value = EBITDA at Last Period*Exit Multiple

Cost of Debt

Go Cost of Debt = Interest Expense*(1-Tax Rate)

Terminal Value using Exit Multiple Method Formula

Terminal Value = EBITDA at Last Period*Exit Multiple
TV = EBITDA_n+1*EM

What is Terminal Value?

Terminal value plays a crucial role in DCF analysis because it represents a significant portion of the total value of a project or investment, especially for projects with long durations or perpetual cash flows. It allows analysts to capture the value beyond the explicit projection period and provides a more comprehensive assessment of the investment's worth. However, it's essential to make reasonable assumptions about future cash flows and growth rates when calculating terminal value to ensure the accuracy of the valuation.
The exit multiple is a valuation metric used in finance to estimate the value of a company or an asset at the end of a certain period, typically when the investment is expected to be sold or exited. It's often employed in methods such as the Exit Multiple Method within the context of discounted cash flow (DCF) analysis or comparable company analysis.

How to Calculate Terminal Value using Exit Multiple Method?

Terminal Value using Exit Multiple Method calculator uses Terminal Value = EBITDA at Last Period*Exit Multiple to calculate the Terminal Value, The Terminal Value using Exit Multiple Method formula is defined as the present value of all future cash flows of a business or an investment beyond a certain point in the future. Terminal Value is denoted by TV symbol.

How to calculate Terminal Value using Exit Multiple Method using this online calculator? To use this online calculator for Terminal Value using Exit Multiple Method, enter EBITDA at Last Period (EBITDA_n+1) & Exit Multiple (EM) and hit the calculate button. Here is how the Terminal Value using Exit Multiple Method calculation can be explained with given input values -> 10150 = 1015*10.

FAQ

What is Terminal Value using Exit Multiple Method?

The Terminal Value using Exit Multiple Method formula is defined as the present value of all future cash flows of a business or an investment beyond a certain point in the future and is represented as TV = EBITDA_n+1*EM or Terminal Value = EBITDA at Last Period*Exit Multiple. EBITDA at Last Period refers to the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) figure for the most recent financial reporting period & Exit Multiple is a valuation metric used in finance to estimate the value of a company or an asset at the end of a certain period.

How to calculate Terminal Value using Exit Multiple Method?

The Terminal Value using Exit Multiple Method formula is defined as the present value of all future cash flows of a business or an investment beyond a certain point in the future is calculated using Terminal Value = EBITDA at Last Period*Exit Multiple. To calculate Terminal Value using Exit Multiple Method, you need EBITDA at Last Period (EBITDA_n+1) & Exit Multiple (EM). With our tool, you need to enter the respective value for EBITDA at Last Period & Exit Multiple and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

How many ways are there to calculate Terminal Value?

In this formula, Terminal Value uses EBITDA at Last Period & Exit Multiple. We can use 1 other way(s) to calculate the same, which is/are as follows -

Terminal Value = Free Cash Flow/(Discount Rate-Growth Rate)

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