Terminal Value

Bri-Chem Corp. (BRY.TO)


+0.01 (+1.56%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 10.31
Free cash flow (t + 1) 1.84
Terminal Value 22.15
Present Value of Terminal Value 13.56

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