@article {Arnold86, author = {Tom Arnold and David S. North}, title = {Firm Valuation with Long-Run Business Cycles}, volume = {14}, number = {3}, pages = {86--95}, year = {2011}, doi = {10.3905/jpe.2011.14.3.086}, publisher = {Institutional Investor Journals Umbrella}, abstract = {Pro forma analysis is often performed with the idea that a firm{\textquoteright}s cash flows are cyclic. Yet, after forecasting cash flows following a cyclic pattern, the remaining cash flows are calculated using a constant growth perpetuity calculation as a {\textquotedblleft}terminal value.{\textquotedblright} Such a calculation for the terminal value is inconsistent with the nature of cyclic cash flows that do not grow at a constant rate. In this article, a method is developed for calculating the terminal value that incorporates the cyclic nature of cash flows into perpetuity. The method is easily incorporated into a {\textquotedblleft}closed-form{\textquotedblright} valuation technique in Excel that is very amenable to Excel{\textquoteright}s data table and {\textquotedblleft}spinner{\textquotedblright} features, as well as Monte Carlo software packages for extensive sensitivity analysis.TOPICS: Private equity, fundamental equity analysis, statistical methods}, issn = {1096-5572}, URL = {https://jpe.pm-research.com/content/14/3/86}, eprint = {https://jpe.pm-research.com/content/14/3/86.full.pdf}, journal = {The Journal of Private Equity (Retired)} }