ModeldrillTerminal value grid by rate and growth
A financial modeling exercise from Modeldrill. Solve it with a live spreadsheet grid in your browser, with Fill right and Fill down, and it is checked the moment you submit.
The task
Show how sensitive the growth-based terminal value is. Fill B5:E8 with the final cash flow in B2 grown once by the growth rate in row 4, divided by the discount rate in column A less that growth rate.
What this exercise teaches
The corner where the rate is lowest and growth highest is far larger than the rest. That spread is why a terminal value should always be shown with its sensitivity.
A hint if you get stuck
Growth sits in row 4 (lock the row), the rate in column A (lock the column), and the cash flow is fully locked.
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