Terminal Value

Kratos Defense & Security Solutions... (KTOS)


+0.08 (+0.72%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.20
Free cash flow (t + 1) 51.18
Terminal Value 1,599.52
Present Value of Terminal Value 1,241.40

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