Terminal Value

Royce Micro-Cap Trust, Inc. (RMT)


-0.03 (-0.35%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 9.96
Free cash flow (t + 1) -0.81
Terminal Value -10.23
Present Value of Terminal Value -6.36

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