What is the formula for calculating net present value (NPV), and what is terminal cash flow included in the calculation?
The NPV is the sum of FCFF and Terminal Value.The terminal cash flow is the final year of your projections.Terminal cash flow is a metric used to estimate the Terminal Value.
Do you discount the terminal value?The terminal value must be discounted by a factor of the number of years included in the initial projection period.The Terminal Value is divided by the number of years in this period.
I- Initial Investment.The cash flows are in the time period.R is the discount rate.I mean time period.
One multiple of the cost of equity by the % of debt on the company's structure adds up to calculate the WACC.