Terminal Value

The Stephan Co. (SPCO)


-0.05 (-2.86%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.19
Free cash flow (t + 1) -1.52
Terminal Value -47.69
Present Value of Terminal Value -37.03

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