Terminal Value

American Campus Communities, Inc. (ACC)


+0.05 (+0.08%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.98
Free cash flow (t + 1) 501.39
Terminal Value 12,597.65
Present Value of Terminal Value 9,422.58

Now that we’ve estimated the free cash flow generated over the five-year forecast period, we need to estimate the value of American Campus Communities, Inc.’s cash flows after that period (if we don’t include this, we would have to assume that American Campus Communities, Inc. stopped operating at the end of the five-year forecast period). To do so, we’ll determine the company’s terminal value.