Finance: What is terminal value?

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

00:26

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