Terminal Value

U.S. Bancorp (USB-PP)

$24.82

-0.04 (-0.16%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.52
Free cash flow (t + 1) 9,788.67
Terminal Value 278,087.14
Present Value of Terminal Value 212,572.46



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