Terminal Value

Summer Infant, Inc. (SUMR)


-0.01 (-0.08%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 4.99
Free cash flow (t + 1) 6.48
Terminal Value 216.85
Present Value of Terminal Value 169.98

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