Terminal Value

Arthur J. Gallagher & Co. (AJG)


-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.