Terminal value

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August 22, 2021 at 9:07 pm #632575
alia99
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what is terminal value? how is it calculated? (i see no mention of it in BPP)

The views of the directors of Pelta Co are that all investment projects must be evaluated over four years of operations, with an assumed terminal value at the end of the fourth year of 5% of the initial investment cost.

PELTA CO S/D 2017

Thanks in advance
August 23, 2021 at 6:28 am #632590
John Moffat
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Terminal means final, so here is simply means that the project has a scrap/sale value at the end of the four years of 5% x $25m.
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