terminal value

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Terminal value

The value of a bond at maturity, typically its par value, or the value of an asset (or an entire firm) on some specified future valuation date. Usually, a perpetuity formula is used. For example, suppose we forecast cash flows through year 10. We make an assumption that year 11 and beyond will be no growth (except for inflation). If the cash flow forecast for year 11 is 100, the firm's discount rate is 12%, and inflation is expected to be 2%, we use the formula V10 = CF11/(disc rate-inflation). Hence, the value is 100/(0.12 - 0.02) that is 1,000. This cash flow needs to be brought back to present value using the formula 1000/(1.12)10, which is 321.97. Note the importance of the inflation assumption.

Terminal Value

1. In accounting, the salvage value.

2. In finance, the present value of future cash flows.

3. In investing, the value of an investment after a given period of time at a given interest rate. The terminal value is calculated in the same way as compound interest.

terminal value

The dollar value of an asset at a specific future time. For example, a $1,000 certificate of deposit that earns an annual return of 9% has a terminal value of $1,539 in five years.

terminal value

The remaining value of property at the end of a certain designated period.

References in periodicals archive ?
Instrumental values (which refers to the values associated with a mode of behavior) and terminal values (which relates to end-states), are related yet are separately organized into relatively enduring hierarchical organizations along a continuum of importance.
Rokeach's model, from which the Rokeach Value Survey (RVS) is derived, is based on two sets of 18 values: terminal values or those end states that a person aspires to, and instrumental values or desired "modes of conduct".
One set is called terminal values and the other is called instrumental values.
A simple, two-dimensional matrix, such as the one in Figure 1, can be used to forecast values given any combination of periodic cash flows and terminal values.
Musser and Orke (1992) then classify the terminal values (desired end-states) into the "social" and "personal" categories.
Due to the absence of arbitrage, none of the two payoffs is greater than the other, for all terminal values of the risky asset.
They are sometimes called final values or terminal values because you can't reasonably challenge that they are good or question what makes them good.
Terminal values refer to desirable end-states of existence, whereas instrumental values are desirable modes of conduct.
One widely used measure of terminal values is Kahle's (1986) List of Values (LOV), which can be arranged so as to be congruent with Maslow's hierarchy of needs.
Musser and Orke then classify the terminal values into the "social" and "personal" categories and the instrumental values into the "moral" and "competence" categories.
It analyzes terminal and chip trends in the region, and contains forecasts for service and terminal values.
As k increases, for instance, as the system becomes more complex, the terminal values of Xnext become more varied.

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