Terminal Value

Ampco-Pittsburgh Corporation

Ampco-Pittsburgh Corporation (AP)


Growth in perpetuity method:
Long-term growth rate
WACC (%) 12.84
Free cash flow (t + 1) -40.46
Terminal Value -457.65
Present Value of Terminal Value -250.16

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