Terminal Value
Merck & Co., Inc. (MRK)
$105.54
-0.31 (-0.29%)
| Growth in perpetuity method: | |
|---|---|
| Long-term growth rate | |
| WACC (%) | 5.18 |
| Free cash flow (t + 1) | 17,410.11 |
| Terminal Value | 547,487.71 |
| Present Value of Terminal Value | 425,312.89 |
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.