Terminal Value
DiamondRock Hospitality Company (DRH)
$8.035
+0.20 (+2.49%)
| Growth in perpetuity method: | |
|---|---|
| Long-term growth rate | |
| WACC (%) | 7.76 |
| Free cash flow (t + 1) | -475.53 |
| Terminal Value | -8,255.72 |
| Present Value of Terminal Value | -5,681.56 |
Now that we’ve estimated the free cash flow generated over the five-year forecast period, we need to estimate the value of DiamondRock Hospitality Company’s cash flows after that period (if we don’t include this, we would have to assume that DiamondRock Hospitality Company stopped operating at the end of the five-year forecast period). To do so, we’ll determine the company’s terminal value.