General Studies · Corporate Valuation
The Terminal Value (TV) calculated using the Perpetuity Growth Method is based on which of the following models?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The historical average of the last 3 years' free cash flows
- 2The net asset book value at the end of the forecast period
- 3The Gordon Growth Model, assuming cash flows grow at a constant rate forever✓
- 4A fixed exit multiple applied to EBITDA
Correct answer
The Gordon Growth Model, assuming cash flows grow at a constant rate forever
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