Terminal Value

Applied Materials, Inc. (AMAT)

$97.36

+4.08 (+4.37%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 9.51
Free cash flow (t + 1) 7,994.71
Terminal Value 106,454.24
Present Value of Terminal Value 67,591.81



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