Terminal Value

Electro-Sensors, Inc. (ELSE)

$4.93

-0.13 (-2.57%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.40
Free cash flow (t + 1) 0.35
Terminal Value 10.44
Present Value of Terminal Value 8.03



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