Which of the following is NOT a method for estimating terminal value?

The terminal value is a crucial component in discounted cash flow analyses, representing the value of an investment at the end of a forecast period, extending into perpetuity. Terminal value can be estimated using various methods, and understanding each method's context is key to grasping which one does not fit into the established approaches.

The Gordon Growth Model, also known as the perpetuity growth model, estimates terminal value based on a constant growth rate assumption for future cash flows. This method is particularly useful when you expect the company to grow at a stable rate indefinitely.

The Discounted Cash Flow Method itself encompasses using future cash flows and discounting them back to present value, and is typically applied within a broader valuation framework rather than directly identifying terminal value by itself.

The Exit Multiple Method estimates terminal value by applying a multiple—often derived from comparable company analysis— to a financial metric such as earnings or cash flow at the end of the forecast period. This approach reflects how similar businesses are valued in the market.

In contrast, the Market Capitalization Method does not directly estimate terminal value. This method refers to determining a company's value by multiplying its stock price by its total outstanding shares. While market capitalization provides an indication of current market value, it does not serve as a method for