Terminal Value

Now that we’ve estimated the free cash flow generated over the five-year forecast period, we need to estimate the value of iShares 1-5 Year Laddered Corporate Bond Index ETF’s cash flows after that period (if we don’t include this, we would have to assume that iShares 1-5 Year Laddered Corporate Bond Index ETF stopped operating at the end of the five-year forecast period). To do so, we’ll determine the company’s terminal value.