Terminal Value

Neoenergia S.A. (NEOE3.SA)

$15.22

-0.01 (-0.07%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.20
Free cash flow (t + 1) 7,726.49
Terminal Value 241,452.76
Present Value of Terminal Value 187,393.05



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