Terminal Value

Humana Inc. (HUM)


-17.67 (-3.54%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 6.19
Free cash flow (t + 1) 8,176.92
Terminal Value 195,153.24
Present Value of Terminal Value 144,529.89

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