Terminal Value

Extreme Networks, Inc. (EXTR)


-0.45 (-2.45%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 11.56
Free cash flow (t + 1) 20.88
Terminal Value 218.39
Present Value of Terminal Value 126.38

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