Terminal Value

The Toronto-Dominion Bank (TD)


-0.64 (-1.03%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 8.56
Free cash flow (t + 1) 30,970.47
Terminal Value 472,110.84
Present Value of Terminal Value 313,108.46

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