Major Indexes

Terminal Value

MercadoLibre Inc.

MercadoLibre Inc. (MELI)

18.33 (+3.49%)

Growth in perpetuity method:
Long-term growth rate
WACC (%) 15.24
Free cash flow (t + 1) 1,826.60
Terminal Value 16,250.92
Present Value of Terminal Value 7,995.80

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