What Is a Use Tax?

[alenaghose]

I’ve been reading about business valuation and came across the term Terminal Value, but I’m not entirely sure what it means and how it’s used. I understand that it’s an important part of a Discounted Cash Flow (DCF) analysis, but how is it calculated? And what does it represent in the context of valuing a company?


From what I gather, terminal value is supposed to estimate the value of a business beyond the forecast period, but how do we make sure this estimate is accurate? Is there a standard method for calculating it, or does it vary by situation?

 

[robertwilliam]

Use Tax is a self-imposed, self-assessed charge that individuals in the supported industry impose while buying goods or services from out-of-the-states.

 

[BlissCore]

Terminal value is the estimated value of a business outside the forecast period of a DCF analysis. Calculated to reflect all the cash flows in the future beyond the projection period, it may be the perpetuity growth approach or exit multiple approach. Although it is an available estimation, it relies on realistic assumptions of the growth rates and market conditions.

 

[deepak]

A use tax is a tax levied on the purchase of goods or services which are used, stored or consumed within a state, but were purchased out-of-state or online where no sales tax was levied. It makes sure that local enterprises will not suffer and states will raise tax funds in a fair way.

 

[isabel]

In a DCF model, Terminal value takes the value of the company, which extends beyond the forecast period, typically computed by the use of the perp, or perpetuity growth, or exit multiple methodology to encompass long-run value.

 

[Sophie]

A use tax is a tax on items bought outside your state and used in it. The purpose of a use tax is to make sure that a tax is levied even if sales tax was not paid at purchase. A use tax nearly always relates to something purchased online, through mail order, or out of state.