Terminal Value

Northern Trust Corporation (NTRS)


+3.02 (+3.58%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 7.68
Free cash flow (t + 1) 2,682.48
Terminal Value 47,226.72
Present Value of Terminal Value 32,622.15

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