Terminal Value

La-Z-Boy Incorporated (LZB)


-0.37 (-1.29%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 6.79
Free cash flow (t + 1) 205.07
Terminal Value 4,281.26
Present Value of Terminal Value 3,082.61

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