1. Terminal Value The tail the wags the dog?

2. Approaches for estimating terminal value
If you are doing an intrinsic valuation, which of the following is never an appropriate way to estimate terminal value?
Liquidation value
Stable growth model (assume stable growth perpetuity)
A growing annuity (say 30 years after your terminal year)
Exit multiple

3. Terminal value: No growth
You are estimating the terminal value for a firm with $ 100 million in after-tax operating income (and after-tax cash flow) with no growth expected in perpetuity. It has a cost of capital of 10%. Estimate the terminal value.

4. Terminal Value: With growth
Now assume that you expect the firm to generate 2% in growth rate forever. What will happen to the terminal value?
It will go up
It will go down
It will not change
None of the above
Any of the above