‘Going Concern’ Project Valuation Models

‘Going Concern’ project valuation models other than the one for the business entity (business unit, regional branch, target market, etc.) have essentially the same structure as the valuation model for a ‘finite’ project.

The only difference is that the former have additional ‘terminal’ value that is calculated by dividing the free cash flow generated in the last - ‘normal’ - year by the discount rate (adjusted WACC). Which must be discounted to valuation date, of course. 

There is a problem with this model, however. And the problem is that 95% of NPV from this project come from the terminal value. Which – unlike with the corporate financial valuation model – is not very comfortable (it does not make sense really that well). Besides, IRR and EP profits are not that meaningful in this case. Therefore, even in this case you will be better off using the valuation model for the finite project, stretching it 10-15 years into the future.