Terminal Value

Illumina Inc.

Illumina Inc. (ILMN)


Growth in perpetuity method:
Long-term growth rate
WACC (%) 10.62
Free cash flow (t + 1) 4,254.18
Terminal Value 64,262.60
Present Value of Terminal Value 38,796.27

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