There are different methods to estimate terminal value in a DCF valuation. The perpetual growth rate method is the most common approach. Other methods include a multiples of earnings, cash flows or revenues or less common methods such as orderly liquidation value; or a fire sale value. The method you chose depends on the stage the company and expected growth drivers as well as the information available.
The perpetual growth rate method is the most common approach. However, the perpetual growth rate is usually assumed to be a positive value. Can the terminal growth rate in a perpetual growth rate method be negative? Why or Why not?
We address this question: “Can the terminal growth rate in a perpetual growth rate method be negative? Why or Why not?” on this page:

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