After the 10-year projection window, the DCF model assumes the business keeps growing owner earnings forever at this one, constant rate — the "Gordon growth" terminal value.
Why it's hard-capped at 3%. No company can outgrow the overall economy indefinitely — if you let a terminal growth rate run above long-run GDP/inflation growth (roughly 2–3%), the math implies the company eventually becomes larger than the entire economy, which is nonsensical. Intrinsic enforces this cap in the calculation itself, regardless of what you type in — you can lower it, but never raise it past 3%.
Why it matters so much. The terminal value often makes up more than half of a DCF's total value. A seemingly small change here — 2.5% versus 3.5% — can swing the valuation by 20% or more. Treat this as the least exciting, most load-bearing number in the whole model.