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Finance: What is terminal value? 0 Views
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Description:
Terminal value is the end value of...something. In finance, it usually refers to the cash flow of a company that is sold, and that flow...stops flowing.
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Transcript
- 00:00
finance a la shmoop what is terminal value and no it's not the value of a [Grave stones with for sale signs on]
- 00:07
dead person nor of a disease that kills you um terminally nor is it what gate 17
- 00:13
be at LaGuardia would sell for on eBay nope terminal value is the end value of [Stop signs appearing]
- 00:19
something and in our little fancy finance world here
- 00:21
it applies usually to a stream of cash flows and then that company is sold at [Two men looking at a screen showing stock prices]
Full Transcript
- 00:26
the end for some terminal value sperm bank of America is storing progeny for [The words 'illustrative example time' fall out of a piggy bank]
- 00:34
the future on a cash flow basis it will break even for five years and at the end
- 00:39
of that time period it will sell for an orgasmically wonderful price of 1 [The bank moves to the end of the timeline and a sold sign appears]
- 00:44
million dollars that million dollars is its terminal or end value and it can be [Pile of cash]
- 00:50
discounted back for time and risk to present value dollars and if you care
- 00:55
about all that we have opuses on the subject all over shmoop and hopefully this
- 01:00
won't be you by the time you've finished watching them all that's [Grave stone of 'Sally Shmooper']
- 01:03
terminal value terminal what things are worth at the end
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