Module II· DCF — Terminal ValueBasic
Question
What is the exit-multiple method for the terminal value?
Answer
Formula
```
TV = Terminal Year EBITDA × Exit Multiple
```
Multiple source
the current trading-comps range (median/mean), often slightly conservative.
Example
comps show 8x → assume 7.5x (pricing in multiple compression).
Advantage
market-anchored, intuitive.
Disadvantage: mixes intrinsic with relative valuation — exactly what a DCF is meant to avoid.
Standard
show both methods, take the range.