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Terminal Value

Intuitive Surgical Inc.

Intuitive Surgical Inc. (ISRG)

Healthcare

Growth in perpetuity method:
Long-term growth rate
WACC (%) 11.19
Free cash flow (t + 1) 2,025.45
Terminal Value 28,170.39
Present Value of Terminal Value 16,575.41



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