skills/dcf-model-builder/references/wacc-terminal-value.md

# WACC, Terminal Value, and Bridge Standards

Cost of equity should support risk-free rate, beta/source, equity risk premium, size/country/company premia, and as-of date. Cost of debt should use current or expected debt cost, tax effect, and target structure, not stale coupon data without caveat.

Terminal growth should be below WACC and plausible versus inflation, GDP, industry maturity, reinvestment needs, and ROIC. Exit multiple should be supported by comps, cycle position, growth/margin profile, and quality differences.

Discounting convention must be explicit: annual or quarterly, mid-year or period-end. Do not mix conventions across scenarios.

EV-to-equity bridge must use current cash, debt, leases, pensions, minorities, associates, preferred, options, and diluted shares. If any bridge item is placeholder or stale, value-per-share is screen-grade at best.

Valuation range should show base/downside/upside and sensitivity-supported low/high cases rather than a single false-precision point estimate.