Terminal Value

Prepared by - Dheeraj Vaidya, CFA, FRM

email - dheeraj@wallstreetmojo.com
websites: www.wallstreetmojo.com www.educorporatebridge.com

Historical Foreca
Free Cash Flow to Firm 2010 2011 2012 2013 2014
EBIT $32 $38 $48 $50 $55
Free Cash Flow to Firm

EBIT x (1-t) $22 $27 $34 $35 $39

Add: Depreciation $30 $30 $30 $31 $33
Less: Capex $15 $30 $30 $32 $34
Less: Change in working capital $7 $6 $3 $3
FCFF $20 $27 $31 $34

Assumptions
WACC 10%
Growth Rate 4%

Present Value of Explicit FCFF $161

1) Perpetuity Growth method 2014

0
Present Value of Explicit FCFF $561

2) Exit Multiple method 2014

0
Present Value of Explicit FCFF $547

Share Price Calculations

Present Value of Explicit FCFF 161 23%
Present value of Terminal Value 547 77%
Total Enterprise Value 708
(-) Debt 100
(+) Cash 50
Equity Value 658
# of Shares 100
Share Price $6.58
 Forecasts
2015 2016 2017 2018
$62 $68 $75 $82

$43 $48 $53 $57

$36 $38 $41 $44
$37 $39 $42 $45
$3 $4 $4 $4
$39 $43 $48 $52

2015 2016 2017 2018

0 0 0 904

2015 2016 2017 2018

0 0 0 881