Terminal Value
Arthur J. Gallagher & Co. (AJG)
$199.9
-3.62 (-1.78%)
| Growth in perpetuity method: | |
|---|---|
| Long-term growth rate | |
| WACC (%) | 6.91 |
| Free cash flow (t + 1) | 2,523.71 |
| Terminal Value | 51,399.36 |
| Present Value of Terminal Value | 36,801.55 |
Now that we’ve estimated the free cash flow generated over the five-year forecast period, we need to estimate the value of Arthur J. Gallagher & Co.’s cash flows after that period (if we don’t include this, we would have to assume that Arthur J. Gallagher & Co. stopped operating at the end of the five-year forecast period). To do so, we’ll determine the company’s terminal value.