TMT (Tech, Media & Telecom)
In a DCF for a high-growth tech company, the terminal value is 85% of total value. Is the DCF useless? How do you handle terminal value dominance?
Model answer
Not useless, but it tells you the valuation is really a view on the mature business, so treat it that way: (1) extend the explicit period until the terminal year reflects genuine steady state -…
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