Enter the annual cash flow beyond a certain time, the required return, and the growth rate to determine the horizon value.

## Horizon Value Formula

The following formula is used to calculate a horizon value.

HV = ACF / (RR - GR)

- Where HV is the horizon value
- ACF is the annual cash flow beyond a certain time
- RR is the required rate of return
- GR is the growth rate

To calculate horizon value, divide the annual cash flow by the difference between the required rate of return by the growth rate.

## Horizon Value Definition

A horizon value is the expected value of a security or investment at a future date.

## Horizon Value Example

How to calculate a horizon value?

**First, determine the annual cash flow.**This will be the assumed cash flow for the foreseeable future. For this example, this value is $40,000.00

**Next, determine the required return.**For this example the required return is .40 or 40%.

**Next, determine the growth rate.**The growth rate for this example is .20 or 20%.

**Finally, calculate the horizon value.**HV = ( $40,000.00 / (.40-.20) ) = $200,000.00

## FAQ

**What is a horizon value?**

A horizon value, also known as a terminal value, is the value of a security or asset at some future date.

**What is horizon value used for?**

The horizon value is used for cash flow models and analysis.