Terminal Value

Arrow Electronics, Inc. (ARW)


+1.00 (+0.85%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 8.12
Free cash flow (t + 1) 1,352.83
Terminal Value 22,105.10
Present Value of Terminal Value 14,961.06

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