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The future value of the cash inflows is also called the terminal value, or terminal value (TV). 507 12% Present (125) 8 8 (259) 22 22 329 Value Net Present Value = 5 * Terminal Value equals perpetuity value with 5% growth per year Table 2 Net Present Value of Phase I Investment ($ Values in Thousands and Rounded) Year 0 1 2 3 4 5 6 Cash Flow 0 9 10 11 12 12 13 Terminal 191 Value * Investment (125) Discount Factor at 1. Terminal value of the business assumes a growth in perpetuity of 3 percent. |
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