Remove Dividends Remove Market Risk Remove Marketability Remove Weighted Average Cost of Capital
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Terminal Growth Rate – A Simple Explanation with Formula

Valutico

Different industries have varying Terminal Growth Rates based on growth potential and market maturity. There are several ways to estimate the Terminal Growth Rate, including historical growth rates, industry averages, economic projections, and qualitative factors. Another approach is the historical growth rate analysis.

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Review the concept of WACC

Andrew Stolz

Weight average cost of capital (WACC) is a calculation of a firm’s cost of capital which includes all sources of capital such as common stocks, preferred stocks, and bonds. A firm uses a mix of equity and debt to minimize the cost of capital. The formula is expressed in the following.

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