Terminal Value

Lockheed Martin Corporation

Lockheed Martin Corporation (LMT)


Growth in perpetuity method:
Long-term growth rate
WACC (%) 9.56
Free cash flow (t + 1) 8,902.63
Terminal Value 160,119.29
Present Value of Terminal Value 101,434.00

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