Terminal Value

Extra Space Storage Inc. (EXR)

$170.22

+3.25 (+1.95%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.32
Free cash flow (t + 1) 1,672.60
Terminal Value 50,379.59
Present Value of Terminal Value 38,877.68



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