T. Rowe Price Mid-Cap Growth Fund (RPTIX)
|Growth in perpetuity method:|
|Long-term growth rate|
|Free cash flow (t + 1)||-|
|Present Value of Terminal Value||-|
Now that we’ve estimated the free cash flow generated over the five-year forecast period, we need to estimate the value of T. Rowe Price Mid-Cap Growth Fund’s cash flows after that period (if we don’t include this, we would have to assume that T. Rowe Price Mid-Cap Growth Fund stopped operating at the end of the five-year forecast period). To do so, we’ll determine the company’s terminal value.