Business Valuation Risk-free Rate Terminal Value 
Equidam
APRIL 22, 2025
10] , [23] , [2] Discount Rate: The rate used to discount future cash flows is typically the cost of equity, calculated via the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium. [23] 29] TV = (Final Year EBITDA * Industry Multiple * Final Year Survival Rate).
Equidam
APRIL 22, 2025
” [1] [2] [4] [15] [19] It estimates a future exit value (often based on projected earnings and industry multiples) and works backward, using the high ROI targets VCs require (due to portfolio risk), to determine what the company could be worth today to justify that future return. [15] How to Value a Business (Equidam Blog).
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