Terminal Value

AeroVironment, Inc. (AVAV)


+0.72 (+0.70%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 4.86
Free cash flow (t + 1) 19.87
Terminal Value 694.58
Present Value of Terminal Value 547.87

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