Terminal Value

Abercrombie & Fitch Co. (ANF)


+0.58 (+2.36%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.42
Free cash flow (t + 1) 135.94
Terminal Value 3,974.74
Present Value of Terminal Value 3,052.77

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