Terminal Value

The Howard Hughes Corporation

The Howard Hughes Corporation (HHC)

Real Estate

Growth in perpetuity method:
Long-term growth rate
WACC (%) 9.30
Free cash flow (t + 1) 1,001.41
Terminal Value 18,894.48
Present Value of Terminal Value 12,112.51

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