Terminal Value

Hammond Power Solutions Inc. (HPS-A.TO)


-0.44 (-1.14%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 7.21
Free cash flow (t + 1) 4.77
Terminal Value 91.57
Present Value of Terminal Value 64.65

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