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Terminal Value

Alpha Pro Tech Ltd.

Alpha Pro Tech Ltd. (APT)

Basic Materials

Growth in perpetuity method:
Long-term growth rate
WACC (%) 10.06
Free cash flow (t + 1) 3.32
Terminal Value 54.87
Present Value of Terminal Value 33.98



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