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 ProShares UltraShort MSCI Emerging Markets’s cash flows after that period (if we don’t include this, we would have to assume that ProShares UltraShort MSCI Emerging Markets stopped operating at the end of the five-year forecast period). To do so, we’ll determine the company’s terminal value.