Terminal Value
Royce Micro-Cap Trust, Inc. (RMT)
$8.49
-0.01 (-0.12%)
| Growth in perpetuity method: | |
|---|---|
| Long-term growth rate | |
| WACC (%) | 9.82 |
| Free cash flow (t + 1) | -0.81 |
| Terminal Value | -10.41 |
| Present Value of Terminal Value | -6.52 |
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.