Terminal Value

Hormel Foods Corporation (HRL)


-0.35 (-0.74%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 4.00
Free cash flow (t + 1) 1,361.88
Terminal Value 68,093.80
Present Value of Terminal Value 55,968.14

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