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Terminal Value

AutoZone Inc.

AutoZone Inc. (AZO)

Consumer Cyclical

Growth in perpetuity method:
Long-term growth rate
WACC (%) 6.90
Free cash flow (t + 1) 2,597.21
Terminal Value 89,558.86
Present Value of Terminal Value 64,153.45



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