Terminal Value

American Homes 4 Rent (AMH-PF)


+0.03 (+0.12%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.38
Free cash flow (t + 1) 871.36
Terminal Value 25,779.82
Present Value of Terminal Value 19,837.59

Now that we’ve estimated the free cash flow generated over the five-year forecast period, we need to estimate the value of American Homes 4 Rent’s cash flows after that period (if we don’t include this, we would have to assume that American Homes 4 Rent stopped operating at the end of the five-year forecast period). To do so, we’ll determine the company’s terminal value.