Terminal Value

Sound Financial Bancorp, Inc. (SFBC)


+0.22 (+0.59%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 8.42
Free cash flow (t + 1) 19.26
Terminal Value 299.99
Present Value of Terminal Value 200.24

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