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How To Calculate Terminal Value

This document provides an overview of calculating terminal value using the perpetuity growth model and exit multiple method. It includes historical and forecasted financial data for a company, assumptions for WACC and growth rates, calculations of free cash flows to the firm, present value of explicit periods, and terminal value. This allows calculating total enterprise value, equity value, and estimated share price of $6.58.

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SODDEY
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141 views

How To Calculate Terminal Value

This document provides an overview of calculating terminal value using the perpetuity growth model and exit multiple method. It includes historical and forecasted financial data for a company, assumptions for WACC and growth rates, calculations of free cash flows to the firm, present value of explicit periods, and terminal value. This allows calculating total enterprise value, equity value, and estimated share price of $6.58.

Uploaded by

SODDEY
Copyright
© © All Rights Reserved
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Terminal Value

Prepared by - Dheeraj Vaidya, CFA, FRM


email - [email protected]
websites: www.wallstreetmojo.com

Free Cash Flow to Firm


EBIT
Free Cash Flow to Firm
EBIT x (1-t)
Add: Depreciation
Less: Capex
Less: Change in working capital
FCFF
Assumptions
WACC
Growth Rate

Present Value of Explicit FCFF

www.educorporatebridge.com

2010
$32

$22
$30
$15

Historical
2011
2012
$38
$48

$27
$30
$30
$7
$20

10%
4%

$161

1) Perpetuity Growth method


Present Value of Explicit FCFF

$561

2) Exit Multiple method


Present Value of Explicit FCFF

Share Price Calculations


Present Value of Explicit FCFF
Present value of Terminal Value
Total Enterprise Value
(-) Debt

$547

161
547
708
100

23%
77%

$34
$30
$30
$6
$27

(+) Cash
Equity Value
# of Shares
Share Price

50
658
100
$6.58

cal

Forecasts
2015
2016
$62
$68

2013
$50

2014
$55

2017
$75

2018
$82

$35
$31
$32
$3
$31

$39
$33
$34
$3
$34

$43
$36
$37
$3
$39

$48
$38
$39
$4
$43

$53
$41
$42
$4
$48

$57
$44
$45
$4
$52

2014
0

2015
0

2016
0

2017
0

2018
904

2014
0

2015
0

2016
0

2017
0

2018
881

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