If we think about where all of our cash flows are coming from in a DCF They're coming from now until infinity In the first forecast period, we come up with our free cash flows So that's detail cash flows calculations either from years 1 to 5 or from years 1 to 10 However, thereafter we assume the company enters some kind of steady state (it's now a mature company) It's during this period that we calculate the terminal value and this will represent the value of the remaining years Year 6 to infinity or year 11 to infinity Now because that value represents so many years, it's going to be a very large proportion of your eventual value of your DCF And that means it's also very sensitive to assumptions that you make when coming up with that value There are two techniques we can use to get to that terminal, and the first is a growing perpetuity We assume the company will grow at a nice steady rate, during the steady state period The growth rate used in that growing perpetuity is one of those assumptions that's very sensitive It will have a huge impact upon that terminal value Alternatively we could use the EV multiple, the enterprise multiple This is where you take the company's EBIT or EBITDA in year 6 or 11 And then you multiply it by another company's EV to EBIT multiple Again, the multiple that you use is another of those assumptions that will have a larger impact on the terminal value calculation