Terminal Value

Merck & Co., Inc. (MRK)


-1.40 (-1.27%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.19
Free cash flow (t + 1) 18,700.63
Terminal Value 586,226.58
Present Value of Terminal Value 455,190.54

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