Terminal Value

Computer Programs and Systems, Inc. (CPSI)

$ 29.66
-0.19 (-0.64%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 4.46
Free cash flow (t + 1) 23.90
Terminal Value 1,194.99
Present Value of Terminal Value 960.76

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