Terminal Value Calculator

Terminal value often drives most of DCF NPV. This calculator computes it properly net of selling costs.

Exit year NOI

Exit cap rate

Selling cost %

Net terminal value

$12,684,615

Gross terminal value

$13,076,923

Selling cost

$392,308

How the math works

Net TV = (exit NOI ÷ exit cap) × (1 − selling cost %). Subtract transaction friction.

Terminal value is often 60-80% of DCF NPV. Getting exit cap wrong by 50bps can move IRR by 200-400bps. Use multiple cap scenarios and stress tests for every DCF.

How to Use

Enter exit year NOI.
Enter exit cap rate.
Enter selling cost %.
Read net terminal value.

Frequently Asked Questions

Why net of selling cost?

Real sales cost 2-4% (broker commission) + 1-2% (closing/legal). Net proceeds = gross − costs. Uncorrected TV inflates NPV by the cost amount.

What cap rate?

Use exit cap 50-100bps higher than going-in cap. Captures aging asset risk. Flat or compressed exit cap = aggressive assumption; document justification.

Hold period?

5-7 years typical for value-add; 10 years for core. Longer holds expose to more cap cycles; shorter holds rely on exit timing. Model multiple scenarios.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.